How Do I Pay an Inheritance Tax Bill?

Introduction

Inheritance Tax must be paid by the end of the sixth month after someone dies, and you'll usually need to make at least a partial payment before you can apply for probate. The good news is there are several ways to pay, including from your own bank account (which you can reclaim later), or directly from the deceased person's bank and investment accounts.

Payment deadline

You must pay Inheritance Tax by the end of the sixth month after the person died. For example, if someone died in January, you must pay by 31 July.

HMRC will charge you interest if you don't pay by this deadline. You usually need to make a payment towards any Inheritance Tax due before you can get a grant of representation (commonly known as probate, or 'confirmation' in Scotland).

Getting a payment reference number

Before you can pay, you'll need to get an Inheritance Tax reference number from HMRC. You should apply for this at least 3 weeks before you need to make a payment.

You can apply for a reference number online or by post using form IHT422. The reference number will be on the letter HMRC sends you, and you'll need to use it when making your payment.

Paying from your own bank account

You can pay Inheritance Tax from your own bank account or from a joint account you held with the deceased. Once you get probate, you can claim this money back from the deceased's estate or from the beneficiaries.

Online or mobile banking

You can pay directly through your online or mobile bank account by starting your payment on the HMRC website and selecting the 'pay by bank account' option. You'll be directed to sign in to your online banking to approve the payment. The payment is usually instant but can take up to 2 hours to show in your bank account.

Bank transfer

You can make a bank transfer using Faster Payments, CHAPS or Bacs from your online bank account or by phoning your bank.

Use these HMRC account details:

• Sort code: 08 32 10
• Account number: 12001136
• Account name: HMRC Inheritance Tax

Use your Inheritance Tax payment reference number as the payment reference.

Faster Payments usually reach HMRC on the same or next day, including weekends and bank holidays. CHAPS payments usually reach HMRC the same working day if you pay within your bank's processing times. Bacs payments usually take 3 working days.

Check your bank's transaction limits and processing times before making a payment.

At your bank or building society

You can pay at a branch by cash or cheque. Complete one of your bank's paying-in slips with these HMRC account details:

• Sort code: 25 61 21
• Account number: 63495590
• Account name: HMRC Inheritance Tax

Make your cheque payable to 'HM Revenue and Customs only' and write the deceased's name and your Inheritance Tax payment reference number on the back.

HMRC will accept your payment on the date you make it (not the date it reaches their account) if you pay between Monday and Friday.

By post

You can send a cheque by post. Make it payable to 'HM Revenue and Customs only' and write the deceased's name and your Inheritance Tax payment reference number on the back. Don't fold your cheque.

Send your cheque separately to any other forms or letters. If you send anything else with your cheque, your payment might be delayed.

Send it to:

HM Revenue and Customs

Inheritance Tax Team

BX5 5BD

Allow 10 working days for the payment to reach HMRC.

Don't send cheques for probate fees to HMRC – these are separate.

Overseas payments

If paying from an overseas account, use these details:

• Business Identifier Code (BIC): BARCGB22
• Account number (IBAN): GB66 BARC 2011 4763 4955 90
• Account name: HMRC Inheritance Tax

HMRC's banking address is: Barclays Bank PLC, 1 Churchill Place, London, United Kingdom, E14 5HP.

Paying from the deceased's accounts

You can ask banks, building societies or investment providers to pay some or all of the Inheritance Tax directly from the deceased person's accounts. This is called the Direct Payment Scheme.

Investment providers can include National Savings & Investments (NS&I), brokers, investment firms, and wealth management accounts.

You can start this process before you've got probate. Here's how:

1. Ask the bank, building society or investment provider to make you a 'personal representative' – each organisation does this differently and some may not be part of the scheme

2. Get your Inheritance Tax payment reference number

3. Fill in form IHT423 and send it to the bank, building society or investment provider – send a separate form for each account you want to use

Paying from government stock

You can also pay Inheritance Tax using the deceased's British government stock (also known as gilts or treasury stock). This involves a separate process through HMRC.

If you can't pay the full amount

Payments on account

You can make payments before you know the exact amount of Inheritance Tax owed. These are known as 'payments on account'.

Postponing payment

If you're unable to release funds from the estate and cannot pay another way, you can ask HMRC to postpone paying Inheritance Tax. This is sometimes called applying for a grant on credit.

Checking your payment has been received

HMRC don't send receipts for each payment you make. They'll write to tell you when you've paid all the Inheritance Tax and interest you owe.

If you've paid through your own bank or building society, check your statement to confirm the payment has left your account.

Sources

• Pay your Inheritance Tax bill
• Rates and allowances: Inheritance Tax thresholds and interest rates
• Wills, probate and inheritance
• Applying for a grant on credit for Inheritance Tax
• Inheritance Tax: application for an Inheritance Tax reference (IHT422)
• Inheritance Tax: Direct Payment Scheme bank or building society account (IHT423)

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.