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Thursday, 4 October 2023

Money, tax and benefits

When Inheritance Tax is due - payment deadlines

If an estate owes Inheritance Tax, you must usually pay it within six months of the death or interest will be charged. In some cases, you can pay by instalments once a year over ten years. The ‘due date’ may differ if Inheritance Tax is due on a trust.

Inheritance Tax ‘due date’ after a death

The due date for Inheritance Tax is six months after the end of the month in which the deceased died (see table below).

You must pay Inheritance Tax before you can get the grant of probate (or confirmation in Scotland).

Month when the person died	Inheritance Tax due date
January	31 July
February	31 August
March	30 September
April	31 October
May	30 November
June	31 December
July	31 January
August	28/29 February
September	31 March
October	30 April
November	31 May
December	30 June

Paying Inheritance Tax by instalments

If you’re paying Inheritance Tax by instalments, the first instalment is due six months after the death on the due date above (see table). The second instalment is due 12 months after that.

Paying Inheritance Tax in yearly instalments

Paying Inheritance Tax on a gift

If someone gives you a gift and doesn’t survive for seven years after making it - and the gift is liable to Inheritance Tax - the payment on the gift is due six months after the death on the due date above (see table).

When Inheritance Tax is due on a gift

Inheritance Tax ‘due dates’ in connection with a trust

If the value of the assets being transferred exceeds the Inheritance Tax threshold (£325,000 in 2012-13 tax year), Inheritance Tax can be due:

on transfers into a trust
on transfers out of a trust
every ten years after the original transfer into a trust

The due date depends on when the assets are transferred:

for transfers made after 5 April and before 1 October, the due date is 30 April in the following year
for any other transfers the due date is six months after the end of the month in which the transfer was made

Trusts and Inheritance Tax

What happens if you don’t pay by the due date?

If you don’t pay Inheritance Tax in full by the due date, HM Revenue & Customs (HMRC) will charge interest on the amount outstanding, whatever your reason for not paying by the due date.

Interest on Inheritance Tax - when and how it is charged

Paying Inheritance Tax in yearly instalments

Penalty charges

If Inheritance Tax is due, you have 12 months from the end of the month in which the death occurred to send in a full Inheritance Tax account - this includes form IHT400, any supplementary pages and papers relating to probate (or confirmation in Scotland).

Unless you have a reasonable excuse for not delivering a full and accurate account within 12 months, you may have to pay a penalty in addition to any interest you owe.