HMRC Inheritance Tax: Customer Guide

Who pays the inheritance tax on the deceased's estate?

• Who else is liable?
• Is there any limit on liability?

Who pays the inheritance tax on the deceased's estate?

As a personal representative, you are liable for inheritance tax on

• assets that were not held in trust, and
• land in the UK, held in trust which comes into your possession.

You must also tell the trustees of any trust the deceased had an interest in, that they are liable for the inheritance tax on the assets in that trust.

Who else is liable?

If, for some reason, you or the trustees do not or cannot pay the tax, you should tell the following that they have a secondary liability to inheritance tax

• the beneficiaries, or anyone, who later receives assets in the estate
• anyone benefiting from assets already in trust at the time of death or who receives income from such assets.

There is more about liability in the Inheritance Tax Manual at chapter 30.

Is there any limit on liability?

Yes. Your liability as a personal representative is limited to the assets you receive as a personal representative, or might have received but for your neglect or default.

There is a separate limit to your liability for the inheritance tax on settled land in the UK. This cannot exceed the value of the land that comes into your possession. Similar provisions apply regarding neglect or default.

There are also limits to the liability for inheritance tax of

• trustees - liability is limited to the assets they have received, accounted for or had available to them as trustees, or would have but for their neglect or default
• any person who possesses, or has a beneficial interest in, any assets - their liability is only to the extent of those assets
• people receiving benefits under a discretionary trust - liability is only to the extent of amounts they received, less any income tax that they have paid