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Friday, 5 October 2023

Money, tax and benefits

Paying Inheritance Tax from your own funds or a joint account

You can use your own money to fund an Inheritance Tax payment and get the money back from the deceased’s estate later. You can also use money from a joint bank account if you held one in joint names with the deceased.

How to pay

Whether you’re using your own funds or money from a joint account, you can pay by cheque, electronic bank transfer or bank giro credit.

How to pay Inheritance Tax Opens new window

Recovering the Inheritance Tax you’ve paid for someone else

If you pay Inheritance Tax from your own or a joint bank account, you are entitled to claim the money back from the estate, or from whoever should have paid the Inheritance Tax. You can do this once you get the grant of probate (or confirmation in Scotland) and before the estate is distributed among the beneficiaries.

You can claim back:

the Inheritance Tax you paid
any interest you paid (if you paid after the due date)
costs incurred in paying the tax
costs of recovering your money - for example, solicitors’ fees

Before trying to recover money from someone who inherited an asset, you need to look at the terms of the will. If the legacy was ‘free of tax’, it’s the estate that should pay the Inheritance Tax, provided there’s enough money to do so.