Payment of IHT on death

By Tolley
Trust_tax_img4

The following Trusts and Inheritance Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Payment of IHT on death
  • Time for payment
  • Submission of form IHT400 and form IHT421
  • Payment methods
  • Interest on IHT
  • Availability of instalment option on death
  • End of instalment option

Time for payment

Two statutory rules apply on death:

  • tax is ‘due’ six months after the end of the month of death and carries interest from the ‘due’ date until paid. (IHTA 1984, s 226(1))

    There is a possibility of payment by instalments, but this applies to certain types of property only ― see the ‘Availability of instalment option on death’ below.

  • personal representatives must pay all tax for which they are liable on delivery of form IHT400. (IHTA 1984, s 226(2))

    To the extent that the instalment option is available this is limited to such instalments that have become due.

Consequently, personal representatives must pay all tax on non-instalment property for which they are liable in order to obtain a grant of probate, notwithstanding the tax is not yet ‘due’. Non-instalment option property is broadly:

  • the assets included in column A of form IHT400, plus
  • any joint property passing by survivorship, and
  • foreign property not qualifying for instalments

Additionally, if more than six months have passed since the end of the month of death, the personal representatives must pay any instalments and interest due on any instalment option property in column B of form IHT400.

Personal representatives should follow the instructions in form IHT400  or the supplementary form IHT400 calculation  to calculate the tax payable on delivery of the account.

See the IHT 400 guidance note.

Trustees of settled property in which the deceased had an interest in possession and which is part of the inheritance tax estate can also pay tax due on the non-instalment option property for which they are liable before the grant

More on IHT compliance for estates: