How to pay inheritance tax

Paying inheritance tax is one of the first major financial tasks an executor or administrator faces — and it comes with a difficult catch. HMRC expects payment before probate is granted, but without probate you often cannot access the estate’s money. This guide explains how the process works, what forms you need, the different ways to pay, and what options you have if the estate does not have enough cash readily available.

All figures and processes in this guide are verified against gov.uk and HMRC guidance as of March 2026.

Key facts at a glance

When does inheritance tax need to be paid?

Inheritance tax is due by the end of the sixth month after the month in which the person died. If someone died on 15 March, the deadline would be 30 September. If they died on 3 January, the deadline would be 31 July (gov.uk — Paying Inheritance Tax).

Interest starts to accrue from the day after that deadline. As of 9 January 2026, the late payment interest rate is 7.75% per annum (gov.uk — HMRC interest rates for late and early payments). This rate is linked to the Bank of England base rate plus 4%, so it changes when the base rate moves. HMRC publishes an inheritance tax interest calculator on gov.uk to help you work out exactly what is owed.

There is a structural difficulty here that catches many families by surprise. You usually need to pay at least some of the inheritance tax before you can get a grant of probate — but without probate, you cannot access most of the estate’s assets. The Direct Payment Scheme (explained below) exists specifically to address this problem.

The deadline for submitting the IHT400 form to HMRC is longer — 12 months from the end of the month of death. But the tax payment itself must arrive by the six-month mark to avoid interest charges.

Which forms do you need?

Which HMRC forms you need depends on whether the estate is above or below the inheritance tax threshold.

Taxable estates: IHT400

If the estate’s value exceeds the available nil-rate band (currently £325,000, or up to £500,000 with the residence nil-rate band for qualifying estates), you must complete form IHT400 — the full Inheritance Tax Account. This is a detailed return covering all assets, liabilities, exemptions, and reliefs.

The IHT400 is submitted to HMRC’s Inheritance Tax team at BX9 1HT. Alongside the main form, you may need to complete supplementary schedules depending on the estate — for example, IHT402 (claim to transfer unused nil-rate band from a spouse), IHT405 (houses and land), IHT407 (household goods), or IHT409 (pensions). HMRC’s guidance notes list which schedules apply to your circumstances (gov.uk — Inheritance Tax Account IHT400).

If you are using the Direct Payment Scheme to pay from the deceased’s bank accounts, you will also complete form IHT423 for each account (see the payment section below).

HMRC aims to process IHT400 forms within 15 working days of receiving the form or the payment, whichever is later. Once processed, HMRC sends a confirmation code that you use when applying for probate. For applications in England and Wales from 18 January 2024 onwards, HMRC sends this code directly — form IHT421 (the probate summary) no longer needs to be completed separately for the probate registry (gov.uk — Probate summary IHT421).

The executor or administrator is responsible for completing and submitting the IHT400. If there are multiple executors, one person typically takes the lead, but all named executors share legal responsibility.

Excepted estates: no separate IHT form needed

For deaths on or after 1 January 2022, if the estate qualifies as an excepted estate — broadly, one where no IHT is due and the estate meets certain conditions — you do not need to complete a separate inheritance tax form. The relevant information is included within the probate application itself (form PA1P if there is a will, or PA1A if there is no will). The old IHT205 short form was abolished for deaths from this date onwards (gov.uk — Report an excepted estate).

An estate generally qualifies as excepted if the gross value is below the IHT threshold (including any transferable nil-rate band from a deceased spouse), there are no complex trust arrangements, and any gifts made in the seven years before death were below £250,000. If in doubt, HMRC’s guidance on excepted estates sets out the full qualifying conditions.

How to pay inheritance tax

There are several ways to pay, and most executors use a combination — particularly when the estate’s cash is locked until probate is granted.

From the deceased’s bank accounts: the Direct Payment Scheme

The Direct Payment Scheme is the most common way to pay at least part of the IHT bill before probate. It allows banks, building societies, National Savings & Investments (NS&I), and some investment providers to release money from the deceased’s accounts and pay it directly to HMRC — even though probate has not yet been granted (gov.uk — Pay from the deceased’s bank, savings or investment account).

The process works as follows:

1. Contact each financial institution where the deceased held accounts and ask to be registered as a personal representative. Each institution handles this differently — some require a death certificate and a copy of the will; others have their own forms.
2. Get an Inheritance Tax reference number from HMRC. You need to apply for this at least three weeks before you intend to make a payment. You can apply online (for most estates) or by post using form IHT422.
3. Complete form IHT423 (Direct Payment Scheme form) for each account you want to pay from. The form tells the financial institution how much to send to HMRC.
4. Submit the IHT423 forms to the relevant institutions, and send the completed IHT400 to HMRC.

Most major UK banks and building societies participate in the scheme, including Barclays, HSBC, Lloyds, NatWest, Nationwide, and Santander. NS&I also participates. Some smaller institutions and investment platforms may not — always check with the provider directly.

The scheme can cover the full IHT bill if there is enough money in the deceased’s accounts. If not, you will need to make up the difference using one of the other payment methods.

By bank transfer or online payment

You can pay HMRC directly by bank transfer (Faster Payments, CHAPS, or Bacs), through online banking, or by telephone banking. You will need the Inheritance Tax reference number and HMRC’s bank details, which are provided when you receive your reference (gov.uk — Paying Inheritance Tax).

From your own funds

If the estate does not have enough accessible cash, executors sometimes pay from their own money and then reimburse themselves from the estate once probate is granted. There is no legal requirement to do this, and you should think carefully before committing personal funds — particularly for large sums. The estate is required to reimburse you, but the reimbursement depends on there being enough in the estate after all debts and taxes are settled.

By cheque

You can send a cheque by post to HMRC, made payable to “HM Revenue and Customs only” followed by your Inheritance Tax reference number. Allow extra time — HMRC treats the payment as received on the date the cheque clears, not the date it arrives.

Selling assets

In some cases, executors need to sell estate assets to raise funds for the IHT payment. This can be complicated when the asset in question is property, since a sale may take months. If the estate is property-heavy and cash-poor, consider applying for instalment payments (below) or speaking to a solicitor about bridging finance options.

Paying in instalments

For certain types of asset, you can spread the inheritance tax over 10 equal annual instalments rather than paying the full amount upfront. The first instalment is due at the normal deadline — the end of the sixth month after the month of death — and subsequent instalments fall due on the anniversary of that date each year (gov.uk — Paying Inheritance Tax in yearly instalments).

Which assets qualify for instalments

You can elect to pay by instalments on tax attributable to:

• Land and buildings — including the deceased’s home
• A business or interest in a business — the net value of a qualifying business
• Unlisted (unquoted) shares — where the shares are worth more than £20,000 and represent at least 10% of the company’s share capital
• Listed shares — only where the holding gave the deceased control of over 50% of the company’s voting rights
• Agricultural land — though agricultural relief often eliminates the IHT charge entirely
• Certain gifts of the above assets made in the seven years before death

To elect for instalment payments, you must indicate this on the IHT400 form.

Interest on instalments

Interest rules depend on the type of asset:

• Land and buildings used as a residence: no interest is charged on the outstanding instalments, provided each instalment is paid on time
• Most other qualifying assets: interest accrues on the unpaid balance from the six-month deadline, even though the instalments themselves are not yet due

If an instalment is paid late, interest is charged on that instalment from the date it was due.

When instalments stop

If you sell the asset — for example, if you sell the deceased’s house — all remaining instalments become payable immediately. You cannot continue paying by instalments on an asset that has left the estate (gov.uk — Paying Inheritance Tax in yearly instalments).

What if there is not enough money in the estate?

Some estates have significant value on paper — a house, investments, possessions — but limited cash. This creates a real problem when the IHT bill is due before probate is granted and before assets can be sold.

Options include:

• The Direct Payment Scheme — use whatever cash is in the deceased’s bank accounts to make a partial payment
• Instalment payments — spread the tax on qualifying assets over 10 years
• Personal advances from executors or beneficiaries — pay now, reclaim from the estate later
• Bridging loans — some specialist lenders offer loans secured against the estate, specifically for paying IHT. These come with interest and fees, so take professional advice before committing
• Negotiate with HMRC — if none of the above options cover the bill, you can contact HMRC to discuss your situation. HMRC has a “grant on credit” process where, in certain circumstances, they may allow probate to be granted before the full IHT is paid, enabling you to sell assets. This is not automatic and requires a formal request

Executor liability

Executors and administrators are personally liable for ensuring the correct amount of inheritance tax is paid. If you distribute the estate to beneficiaries before settling the IHT bill, HMRC can pursue you personally for the outstanding amount. Once you have paid all IHT due and HMRC is satisfied, you can request a clearance certificate — formal confirmation that no further IHT is owed. This protects you from future claims, provided you disclosed all relevant information accurately (gov.uk — Inheritance Tax overview).

If the estate is complex, illiquid, or involves assets that are difficult to value (business interests, overseas property, agricultural land), professional advice from a solicitor or accountant experienced in estate administration is strongly recommended.

After you have paid: getting probate

Once HMRC has processed your IHT400 and received payment (or accepted an instalment arrangement), the next step is to apply for probate. The sequence is:

1. HMRC issues a confirmation code — for applications in England and Wales, HMRC sends a code that you enter in your probate application. (For Northern Ireland and Scotland, the process involves stamped forms.)
2. Submit your probate application — in England and Wales, this is done online or by post using form PA1P (if there is a will) or PA1A (if there is no will). You include the HMRC confirmation code, the original will (if applicable), the death certificate, and the application fee (currently £300 for estates over £5,000, with no fee for estates under £5,000).
3. The Probate Registry issues the grant — this is the legal authority that allows you to access the estate’s assets, sell property, close accounts, and distribute to beneficiaries.

HMRC aims to process IHT400 forms within 15 working days. The Probate Registry typically takes a further 8 to 12 weeks to issue the grant, though times vary. For a full walkthrough, see our guide on how to apply for probate.

Once you have the grant, you can begin collecting assets, paying debts, and distributing the estate. If the final estate value turns out to be different from the IHT400 estimate — for example, if a property sells for more or less than the probate valuation — you may need to submit a corrective account to HMRC and pay additional tax or claim a refund.

Can you pay inheritance tax before probate?

Yes — and in most cases you must. HMRC expects at least some payment towards the IHT bill before probate is granted. The Direct Payment Scheme exists specifically for this purpose, allowing executors to pay HMRC from the deceased’s accounts without needing probate first. You can also pay from your own funds or from any other accessible source (gov.uk — Paying Inheritance Tax).

What is the interest rate on late inheritance tax?

As of 9 January 2026, the interest rate on late inheritance tax payments is 7.75% per annum. This rate is linked to the Bank of England base rate plus 4%, so it changes when the base rate moves. Interest accrues from the day after the six-month deadline (gov.uk — Inheritance Tax thresholds and interest rates).

HMRC provides an online inheritance tax interest calculator to help you work out the exact amount owed.

What if the estate cannot pay the IHT bill?

If the estate lacks sufficient liquid funds, the executor should first use the Direct Payment Scheme to pay what they can from the deceased’s bank accounts. For property and certain other assets, instalment payments spread the bill over 10 years. Beyond that, executors can advance personal funds (to be repaid from the estate), take out bridging finance, or contact HMRC directly to discuss a grant on credit arrangement.

Ignoring the problem will make it worse — interest accrues daily, and HMRC can charge penalties for prolonged non-payment. If you are struggling with an estate that cannot cover its IHT bill, seek advice from a solicitor or probate specialist sooner rather than later.

Summary

Paying inheritance tax involves a clear sequence: value the estate, complete the IHT400 (if the estate is above the threshold), pay HMRC by the six-month deadline, and then apply for probate. The Direct Payment Scheme solves the probate catch-22 by allowing banks to pay HMRC directly from the deceased’s accounts. For property-heavy estates, instalment payments spread the cost over a decade. Whatever your situation, the most important step is to start early — delays create interest charges and complicate the entire probate process.

If you need to understand how the nil-rate band and residence nil-rate band affect the amount of tax due, or which exemptions and reliefs might reduce the bill, see our other guides in the inheritance tax section. For an overview of how gifts interact with the IHT calculation, see our guide to the 7-year rule for gifts.