When and How to Pay Inheritance Tax on an Estate

Inheritance Tax is normally due by the end of the sixth month after the person died, and most of it has to be paid before probate is granted. HMRC's guidance is blunt about the order of events: "You must pay some or all of the Inheritance Tax before you can get a 'grant of representation' also known as 'probate'."¹

That creates the practical squeeze most families run into. The estate's money is often still locked in a bank account or tied up in a house, yet the tax bill falls due first. Executors can pay from the estate's own funds where they are available, pay from their own pocket and reclaim it, or use one of the instalment options for assets that take time to sell.

The deadline itself is fixed. "You must pay Inheritance Tax by the end of the sixth month after the person dies to avoid paying interest," HMRC states, so a death in January means a payment date of 31 July.² Miss it and interest runs from the first day of the seventh month after the month of death.³

Inheritance Tax is due six months after the death

The six-month rule is the single date that matters most. HMRC's own example is that if the person died in January, the Inheritance Tax must be paid by 31 July.¹ Independent guidance puts it the same way: Inheritance Tax generally needs to be paid within six months of the end of the month in which the person died, which is why good record keeping from the start matters.⁶ Charity guidance for will makers states that the executor must pay any inheritance tax within six months of the person named in the will passing away.⁷

Two deadlines run alongside each other and are easy to confuse. The payment deadline is six months after the death. The reporting deadline is longer: if the estate owes Inheritance Tax, its value must be reported within one year using form IHT400.⁴ Reporting late and paying late are separate problems, and the interest charge attaches to the payment.

The deadline is the same across the UK. In Scotland, mygov.scot tells executors that any Inheritance Tax due will usually be paid before they receive the inheritance, and points them to HMRC's inheritance tax support.⁸ The tax itself is reserved to Westminster, so the deadline does not change north of the border, though the process for confirming an estate does.

What happens if you pay after the deadline

Interest is the consequence, not a penalty in the Self Assessment sense. HMRC states plainly: "We'll charge you interest if you do not pay all of the Inheritance Tax by the due date."¹ The IHT400 notes set out the legal basis, that interest is charged from the first day of the seventh month after the month in which the person died.³ Independent guidance confirms that if the tax is not paid on time, interest will be owed on the inheritance tax.⁷

There is a route to delay payment without delay to the grant. An executor can apply for a grant on credit, which allows probate to be issued before the tax is paid.⁴ That does not remove the bill. Once the grant has been issued, the estate is expected to pay the outstanding tax as soon as possible.⁴

Where the estate cannot pay at all, the position is different from an ordinary debt. Inheritance Tax is a liability of the estate, and the personal representative is responsible for paying it from estate assets.⁹ If the estate is insolvent, the order in which debts are paid matters, and free debt advice is available from charities such as Business Debtline.¹⁰

Paying in yearly instalments

Instalments exist because some assets cannot be turned into cash quickly. Tax on certain assets may be paid by 10 annual instalments.³ The first instalment is due at the end of the sixth month after the death, and payments are then due every year on that date.²

You have to ask for them. The election is made on Inheritance Tax account form IHT400, and it is not automatic.² Interest usually applies to the instalments, though there is an important exception for certain relief-bearing assets.

The interest-free treatment is new and narrow. For assets inherited from 6 April 2026 onwards, instalments are interest-free if the asset qualifies for Agricultural Relief or Business Relief. If an instalment is paid late, interest still runs from the date it was due to the date of payment, though no interest is charged on the outstanding tax balance.² These rules do not apply to assets already being paid for by instalments before 6 April 2026.²

Separately, those facing an Inheritance Tax bill on farms and businesses will be able to pay it in equal annual instalments over 10 years, with no interest charged.¹¹ You can also clear the whole balance early: write to HMRC asking for a final assessment and pay off the full tax and interest at any time.²

Who pays the tax and from which money

The personal representative, meaning the executor or administrator, usually pays any Inheritance Tax due before giving beneficiaries their inheritance.⁹ The tax is normally paid from the estate by the personal representatives.¹² As a beneficiary, you do not usually owe any tax on an inheritance at the time you inherit it.⁹

What you can owe later is Income Tax on any profit the inherited assets produce, for example dividends on shares or rental income from a property.⁹ That is a separate tax on a separate event, and it does not change the Inheritance Tax position.

There are two practical wrinkles worth knowing. First, HMRC will accept a payment made at a branch on the date you make it, rather than the date it reaches HMRC's account, if you pay between Monday and Friday.¹³ That matters when a deadline is close. Second, if you pay Inheritance Tax from a joint bank account held in your name and the deceased's, you can claim it back from the deceased's estate.¹³

Where a property was gifted during the person's lifetime and a tax bill follows, the new owner is liable to pay it.¹⁴ That is a different rule from the estate's own liability and catches people who assumed a gift settled the matter.

Pension savings will count towards Inheritance Tax

This is the biggest change on the horizon. Until April 2027, any money left in your pension will not be counted for Inheritance Tax purposes.¹⁵ From 6 April 2027, unused pension funds and death benefits will be brought into the value of a person's estate for Inheritance Tax.⁵

The mechanics are set out in the government's consultation response. Personal representatives will be liable to report and pay Inheritance Tax on pensions from 6 April 2027.¹⁶ Where inheritance tax is due, it will be applied to the pension first, and beneficiaries will then be eligible for a statutory deduction, meaning they pay income tax only on the remaining amount after inheritance tax has been settled.¹⁷ If a pension beneficiary directs the scheme to pay their Inheritance Tax liability, those payments will be authorised payments and will not be subject to Income Tax.¹⁸

One carve-out is confirmed: all death in service benefits payable from a registered pension scheme will be excluded from the value of an individual's estate for Inheritance Tax purposes from 6 April 2027.⁵

The existing income tax rules on inherited pensions are separate and still apply. If you die after age 75, the pension usually cannot be inherited tax-free, and the inherited amount is normally added to your beneficiary's other income to calculate how much Income Tax is due.¹⁹ Pension Wise, the free government guidance service, explains the options for taking a whole pot and for adjustable income.²⁰

Where to get help

Inheritance Tax is one of the few bills where the deadline, the probate process and the estate's cash flow all collide. The order of operations is fixed: value the estate, report it, pay the tax, get the grant.¹

Free, impartial help is available. Pension Wise offers free guidance on pension decisions, including what happens to a pot on death.²⁰ Business Debtline gives free advice on debts after death, including insolvent estates.¹⁰ In Scotland, mygov.scot sets out inheritance tax support for executors.⁸ For the wider process of administering an estate, see applying for probate, being an executor and valuing an estate.