Archive Website of the UK government

Reasons for making a payment in advance

If the financial affairs of the estate are complicated, you might find it difficult to work out how much Inheritance Tax is due by the six-month payment deadline. Paying Inheritance Tax after the 'due date' means you might have to pay interest on the amount outstanding.

If you pay a lump sum in advance, HMRC won't charge you interest on the amount you've paid. If that amount is less than the eventual amount due, you'll only have to pay interest on the balance outstanding.

• Interest on Inheritance Tax - when and how it is charged

Example

If you estimate that the Inheritance Tax on an estate will be £50,000 but think you won't be able to work out exactly how much is payable by the due date, you could make a payment of £50,000 on account.

If the Inheritance Tax due on that estate turned out to be only £45,000, you'd receive a refund of £5,000 plus interest after probate (or confirmation) had been granted.

If the Inheritance Tax on that estate turned out to be £55,000, you'd only pay interest on £5,000 rather than the full £55,000.

• Interest on Inheritance Tax - when and how it is charged

How to make a payment in advance

To make a payment on account, you must first get an Inheritance Tax reference number and payslip.

• How to pay Inheritance Tax on account Opens new window

What happens if you overpay?

If you pay too much money in advance, HMRC will refund any excess money to you after you get the grant of probate (or confirmation in Scotland).

HMRC will also pay interest on the amount you've overpaid at 1 per cent below the Bank of England base rate, although there will be a minimum repayment rate of 0.5 per cent.

• Interest rates for Inheritance Tax Opens new window

More useful links

• When Inheritance Tax is due - payment deadlines