• There are several ways to pay Inheritance Tax, including directly from the deceased’s bank account, using your own funds, paying HMRC directly or, for certain assets, paying in instalments.
• You’ll need an Inheritance Tax payment reference number so HMRC can match your payment to the right estate, and it’s important to keep records of any payments made.
• If the estate has enough value to cover the bill but the money is tied up in property or other assets, an Estate Advance can provide access to funds before probate is completed.

Paying Inheritance Tax (IHT) can feel like a big responsibility, especially if this is the first time you are acting as an executor.

In most cases, the executor or administrator is responsible for working out how much Inheritance Tax is due and arranging payment to HMRC. The issue is that some Inheritance Tax may need to be paid before probate can be granted, at a point when money in the estate isn’t available yet.

At Provira, our Estate Advance gives executors access to up to 50% of the estate value, often within days. That way, you can meet HMRC’s financial deadlines without any stress or pressure

So, how do you actually pay Inheritance Tax?

What do you need before you can pay Inheritance Tax?

Before making an Inheritance Tax payment, you will normally need to value the estate, work out whether IHT is due and report the estate to HMRC.

You’ll also need your Inheritance Tax payment reference number. This is important because it allows HMRC to match your payment to the estate.

Once you know what needs to be paid and have the relevant reference, there are a number of ways the bill can be settled.

How to pay Inheritance Tax

Executors have a number of ways to make an HMRC IHT payment. Some are pretty easy to do; others can be slow or put more financial pressure on the executor.

Options include:

1. Pay IHT from the deceased’s bank account

If there is enough money in the deceased’s bank or building society accounts, it may be possible for the money to be paid directly to HMRC through the Direct Payment Scheme.

Most banks can pay HMRC directly via the Direct Payment Scheme using:

• The death certificate
• Form IHT423
• Your HMRC inheritance tax payment reference number

This is the easiest option for paying Inheritance Tax, but only works if there is enough cash in the account to do so.

2. Pay IHT using your own funds and reclaim it later

Some executors use their own money to pay an IHT bill and then reimburse themselves from the estate once the money becomes accessible.

While relatively common, this option does mean that executors need to take on personal financial risk.

An executor could potentially be waiting months for probate, a property sale or other assets to be released before getting that money back. For a big IHT bill, this can feel like a risky option.

3. Make a payment to HMRC yourself using an estate account

Inheritance Tax can also be paid directly to HMRC by the executor from an estate account.

To do this, you need:

• A payment reference
• HMRC bank details
• Proof of authority as executor

The important thing here is to use the right Inheritance Tax payment reference so HMRC can allocate the money to the right estate.

It’s also important to keep a record of any payments you make.

4. Pay Inheritance Tax in yearly instalments

If the estate includes land, property or business assets, HMRC may let you pay IHT in 10 annual installments.

This can make a big Inheritance Tax bill more manageable where the estate does not have enough cash available immediately.

However, only certain assets qualify and interest is charged on outstanding amounts. If an asset is sold for any reason, the remaining tax relating to it may also become payable immediately.

5. Use an Estate Advance

Sometimes an estate is valuable enough to pay its Inheritance Tax bill, but doesn’t have enough cash available when the IHT deadline comes around.

For example, if a big chunk of the estate is tied up in a property, investments or other assets that cannot yet be sold or accessed, then the estate might be liable to pay the tax, without the cash available to do so.

An Estate Advance from Provira allows executors to access up to 50% of the net value of the estate, often within days, which can then be used to pay estate costs like Inheritance Tax.

You do not need a personal guarantee or monthly repayments and we only charge simple interest, not compound interest, making it both quick and cost effective.

Apply for Provira’s Estate Advance.

How do you actually send the money to HMRC?

Once you have worked out where the money is coming from, you still need to actually get it to HMRC.

Before making a payment, you’ll need an Inheritance Tax payment reference number. HMRC recommends applying for this at least three weeks before you plan to make a payment. This reference is important because it tells HMRC which estate your payment relates to.

You can then pay HMRC in several ways, including:

• Through your online or mobile banking
• By Faster Payments, CHAPS or Bacs bank transfer
• By telephone banking
• At a bank or building society
• By cheque through the post

If you’re using money held in the deceased’s bank, savings or investment accounts through the Direct Payment Scheme, the process is slightly different. 

You complete form IHT423 and the bank, building society or investment company sends the money directly to HMRC.

Regardless of the method you use, make sure you use the right Inheritance Tax payment reference and keep a record of the payment. HMRC doesn’t send a receipt every time you make a payment, although it will write to you once all the Inheritance Tax and interest due has been paid.

For the latest payment methods and details, always check the HMRC website before sending the money.

What if you don’t know the exact Inheritance Tax amount yet?

That’s okay. An estate needs to be valued before you know exactly how much Inheritance Tax is due, and sometimes this can take a little while.

It may be possible to make an early payment to HMRC before the final figure has been confirmed. Doing so can reduce the risk of being charged interest and also make it easier to obtain probate.

Do you have to pay Inheritance Tax before probate?

Yes, with most estates, at least some of the Inheritance Tax due will need to be paid before the Grant of Probate can be issued.

This can create a difficult situation for executors. You may need probate to access or sell estate assets, while needing money from those assets to deal with the tax bill.

We’ve explained the timings, deadlines and relationship between IHT and probate in more detail in our guide on when you pay Inheritance Tax.

What happens if you can’t pay Inheritance Tax?

If the estate doesn’t have enough cash to pay its Inheritance Tax bill, then executors have a few options, including:

• Paying tax in instalments (if HMRC allows you to)
• Funding the payment personally and reclaiming it later
• Using estate finance like Provira’s Estate Advance to access some of the estate’s value earlier and pay off the tax

The right option will depend on the estate, how big the Inheritance Tax bill is and how quickly the money is needed.

How an Estate Advance from Provira can help you pay Inheritance Tax

Provira’s Estate Advance gives executors access to up to 50% of an estate’s value, often within days, so money can be made available while the probate process is still ongoing.

The Estate Advance comes with:

• No personal guarantees
• No monthly repayments
• No early repayment fees
• Simple interest only, never compound
• Repayment from estate funds once released

This can be particularly useful where the estate has enough value to cover its liabilities, but that value is tied up in a property or other assets.

Need support paying Inheritance Tax? We’re here to help

Paying Inheritance Tax isn’t always difficult because of the tax itself. Often, the real problem is working out where the money is going to come from before the estate can be accessed.

If you’re struggling to work out how to pay Inheritance Tax to HMRC, or you need access to estate funds to settle an IHT bill, our team can talk you through your options.

Apply online or speak to our specialists today and we’ll help you move forward with clarity, confidence and ease