Interest on Inheritance Tax - when and how it is charged

If you’re the executor or personal representative for the estate of someone who’s died, you have six months from the end of the month in which they died to pay any Inheritance Tax due. After that, interest will be charged on the amount of tax outstanding.

On this page:

When do interest charges start?
What is the rate of interest?
Working out how much interest is due
Interest when paying Inheritance Tax in instalments
More help?
More useful links

When do interest charges start?

You have to pay interest from the day after the ‘due date’, which is exactly six months from the end of the month in which the person died. It doesn’t matter when in the month they died - the due date is worked out from the end of that month.

This table shows how to work out the due date and the date when interest charges start.

Month of death	Due date	Interest starts from
January	31 July	1 August
February	31 August	1 September
March	30 September	1 October
April	31 October	1 November
May	30 November	1 December
June	31 December	1 January
July	31 January	1 February
August	28/29 February	1 March
September	31 March	1 April
October	30 April	1 May
November	31 May	1 June
December	30 June	1 July

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What is the rate of interest?

See a full list of interest rates going back to October 1988

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Working out how much interest is due

Once you've filled in the forms and are getting ready to pay the tax, work out how many days there are between the date interest started and the date you expect to pay the tax. You must include the day interest started and the day you intend to pay in your calculation (see the example below).
Find out the interest rate for the period over which you have been unable to pay the Inheritance Tax in full.
Multiply the tax due by the interest rate then by the number of days and divide the answer by 366.

The calculation is:

tax due x the interest rate x the number of days/366 = interest due

Example

The death occurred on 10 December 2006, so the due date is 30 June 2007. A tax payment of £5,000 is made to HM Revenue & Customs (HMRC) on 10 November 2007.

Interest charges start on 1 July and finish on 10 November 2007, with an interest rate increase on 6 August.

You work out the interest as follows:

From 1 July to 5 August 2007

Interest rate: 4%
Number of days: 36 (31 in July, 5 in August)
Interest due: £5,000 x 4% x 36/366 = £19.67

From 6 August to 10 November 2007

Interest rate: 5%
Number of days: 97 (26 in August, 30 in September, 31 in October, 10 in November)
Interest due: £5,000 x 5% x 97/366 = £66.25

So the total amount of interest to pay is £19.67 + £66.25 = £85.92

It can be complicated to work out the right amount of interest. If you need help, try the interest rate calculator below or call the Probate and Inheritance Tax Helpline.

Work out the interest due with an interest calculator

Contact the Probate and Inheritance Tax Helpline

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