In this section:
- Who pays Inheritance Tax?
- When Inheritance Tax is due - payment deadlines
- Finding the money to pay Inheritance Tax
- How to make an Inheritance Tax payment
- Paying Inheritance Tax in yearly instalments
- Paying Inheritance Tax on account
- Interest on Inheritance Tax - when and how it is charged
- Inheritance Tax and record keeping
Paying Inheritance Tax on account
You can make a payment on account with HM Revenue & Customs (HMRC) at any time - even if you don't yet know how much Inheritance Tax is due and you aren't ready to apply for a grant of probate (or confirmation in Scotland). It may also earn you interest.
On this page:
- Reasons for making a payment in advance
- What happens if you overpay?
- Payments on account - example
- How to make a payment on account
- More useful links
Reasons for making a payment in advance
If the financial affairs of the estate are complicated, you might find it difficult to work out how much Inheritance Tax is due by the six-month payment deadline. Paying Inheritance Tax after the 'due date' means you might have to pay interest on the amount outstanding.
If you pay a lump sum in advance, HMRC won't charge you interest on the amount you've paid. If that amount is less than the eventual amount due, you'll only have to pay interest on the balance outstanding.
When and how interest is charged on Inheritance Tax
What happens if you overpay?
If you pay too much money on account, HMRC will refund any excess money to you after you get the grant of probate (or confirmation in Scotland).
HMRC will also pay interest on the amount you've overpaid at 1 per cent below Bank of England base rate, although there will be a minimum repayment rate of 0.5 per cent.
Check interest rates for Inheritance Tax
Payments on account - example
If you estimate that the Inheritance Tax on an estate will be £50,000 but think you won't be able to work out exactly how much is payable by the due date, you could make a payment of £50,000 on account.
If the Inheritance Tax on that estate turned out to be only £45,000, you'd receive a refund of £5,000 plus interest after probate (or confirmation) had been granted.
If the Inheritance Tax on that estate turned out to be £55,000, you'd only pay interest on £5,000 rather than the full £55,000.
How to calculate interest on payments of Inheritance Tax
How to make a payment on account
To make a payment on account, you must first obtain an Inheritance Tax reference number and payslip.
How to pay Inheritance Tax on account with HMRC
