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Paying Inheritance Tax
If you have been nominated as someone's personal representative you need to value all of the assets (property, possessions and money) that the deceased person owned, to work out whether any Inheritance Tax is due. Inheritance Tax is only payable if a deceased person's estate is worth more than £312,000 (2008-2009 tax year).
Valuing the estate for Inheritance Tax purposes
You need to carry out the valuation of the deceased person's estate assets before applying to the Court Service to take over management of their estate (called 'applying for probate' or sometimes 'applying for a grant of representation/ confirmation'). If Inheritance Tax is due on the estate, the probate or grant won't normally be issued until at least some of the tax has been paid.
Forms you need to complete
There are different forms to complete, depending on the value of the estate. Once you've completed the relevant tax forms, you also need to complete the relevant probate form; also shown below. You can learn more about how to apply for probate in our related article.
Paying Inheritance Tax - forms you need to complete
You'll find links to these forms below.
| Country in which the deceased person lived | Required forms if Inheritance Tax is unlikely to be due ('excepted estates') | Required forms if you expect Inheritance Tax to be due |
|---|---|---|
| England or Wales | Probate application form PA1 Inheritance Tax form IHT205 |
Probate application form PA1 Inheritance Tax form IHT400 Form IHT421 'Probate summary' |
| Scotland | Form C1 ('Inventory') and form C5 if they died on or after 6 April 2004; otherwise form C1 only | Form C1 ('Inventory') Inheritance Tax form IHT400 |
| Northern Ireland | Inheritance Tax Form IHT205 only |
Inheritance Tax form IHT400 Form IHT421 'Probate summary' |
There are additional supplementary forms that accompany the IHT400. Use the IHT400 notes to help you decide which you need to complete.
Deadline for paying Inheritance Tax
In most cases, Inheritance Tax must be paid within six months from the end of the month in which the death occurs, otherwise interest is charged on the amount owing.
Tax on some assets, including land and buildings (including the deceased person's house), can be deferred and paid in equal instalments over 10 years, but interest will be charged in most cases.
How you make the payment
You can pay the Inheritance Tax due using any of the following methods:
- cheque, electronic bank transfer or Giro cheque (from any joint account you held with the deceased)
- any of the above methods from your own account (you would then reclaim the money from the estate once you have obtained probate)
- direct from the deceased person's bank or building society account(s) using the Inheritance Tax direct payment scheme (not available where funds are in a joint account; you'll also need to check whether your bank or building society is a member of the scheme)
- using British Government Stock held in the deceased's name
- using National Savings investments held in the deceased's name
Confirmation of completed Inheritance Tax payment
Once you have paid all the Inheritance Tax (and any interest due), you can ask HMRC to issue you with a 'clearance certificate' to confirm that (subject to certain conditions) no further tax is due. To request the certificate, you need to complete form IHT30. You can also request this certificate if paying by instalments.
Paying Inheritance Tax on lifetime gifts or transfers
If the person died within seven years of making a gift, or transferring assets into a company or most types of trust, those assets will count as part of their estate and Inheritance Tax may be due on them. If Inheritance Tax is due, the person or ' transferee' who received the gift or assets is normally liable to pay the Inheritance Tax. Any Inheritance Tax already paid at the time of a transfer into a trust or company will be taken into account. The personal representative would need to let the relevant people know if Inheritance Tax is due.
To check which types of trust these rules apply to read our article on lifetime transfers below. You can also read more about Inheritance Tax on lifetime gifts and transfers on HMRC's website.
Further information
The Probate and Inheritance Tax helpline: 0845 3020 900 (open from 9.00 am to 5.00 pm Monday to Friday).
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