• Inheritance Tax normally needs to be paid, or a payment arrangement agreed with HMRC, before a Grant of Probate is issued.
• It can be paid directly from the deceased’s bank account through the Direct Payment Scheme, from an executor’s own funds, or in some cases by instalments.
• If the estate’s money is tied up in property or other assets, Provira’s Estate Advance can give executors access to up to 50% of the net value of the estate within days.

When someone dies, sorting out how Inheritance Tax will be paid often has to happen before probate can move forward. That can feel like a weird order of events, especially if the money needed to pay the bill is sitting inside the estate itself.

This is one of the most common problems executors bring to us. The value is there on paper, in a house, shares or savings that haven’t been released yet, but the cash to pay HMRC isn’t always easy to reach.

If that sounds like your situation,Provira’s Estate Advance gives executors access to up to 50% of the net value of the estate, often within days, so the tax can be paid without dipping into your own savings.

Speak to the team and apply today.

Do you have to pay Inheritance Tax before probate is granted?

In most estates, yes. Some or all of the Inheritance Tax that’s due needs to be paid, or a payment arrangement needs to be agreed with HMRC, before a Grant of Probate is issued.

Before probate can move forward, the estate normally needs to work out what Inheritance Tax is due and either pay what’s needed or agree another arrangement with HMRC. Getting to that point means valuing the estate, working out how much is owed and reporting the figures to HMRC.

The deadline for paying is six months from the date of death. We’ve covered that timeline, along with the other deadlines executors need to know, in our guide onhow and when to pay Inheritance Tax.

How much tax is actually due depends on the value of the estate and which tax-free allowances apply. The standard nil-rate band is currently £325,000, with an extra residence nil-rate band of up to £175,000 where a home is left to children or grandchildren.

There can also be unused allowances transferred between spouses and civil partners. Our guide to theInheritance Tax thresholds explains how the different allowances work.

Do you have to pay all of the Inheritance Tax before probate?

Not always the full amount, no. If the estate includes certain illiquid assets, like property, a business or agricultural land, HMRC may allow the tax on those specific assets to be paid in yearly instalments over up to ten years, rather than in one lump sum.

The catch is that the first instalment is usually still due within the normal six-month window, and interest builds up on whatever balance is left outstanding. It also only applies to the tax attached to those particular assets, not the whole bill.

We go through the rules and how the instalment option works in our guide topaying Inheritance Tax in instalments.

Other options exist too, and we’ve covered them in more detail in our guide onwhat happens if an estate can’t afford to pay Inheritance Tax.

How do you pay Inheritance Tax before probate?

Once the estate has been valued and the tax reported to HMRC, there are a few different ways the bill can be paid. Which one you go for will depend on where the estate’s money is sitting.

Direct Payment Scheme

If the deceased held enough money in a bank or building society account, that account can often send money straight to HMRC on the estate’s behalf, without needing to wait for the Grant of Probate first.

This is done using form IHT423 alongside the death certificate and the estate’s HMRC payment reference.

Paying from your own funds

Some executors cover the bill personally and then reclaim the money from the estate once funds become available. It’s worth being realistic about how long that could take though, and whether you’re comfortable having the money tied up until then, since probate and any property sale can run on for months.

Paying through an estate account

Where an estate account has already been set up, a payment can sometimes be made directly from it, using proof of your authority as executor alongside the same payment reference.

The forms and reference number you’ll need

Whichever route you use, you’ll need an Inheritance Tax payment reference number so HMRC can match the payment to the right estate. It’s worth applying for this early and keeping a record of any payments you make.

If none of these routes gives you access to enough cash in time, borrowing against the estate itself through a specialist Estate Advance, like the one offered by Provira, is another option. 

Read more about our Estate Advances here.

What if the estate doesn’t have enough cash to pay Inheritance Tax before probate?

If the estate doesn’t have enough cash to pay IHT before probate, the executor may need to look for alternative options.

This happens more often than people expect, and it usually comes down to where the estate’s value sits rather than how much the estate is worth overall.

Take an estate where most of the value is tied up in an £800,000 house, with only £25,000 sitting in the bank. If there’s a big Inheritance Tax bill to pay, the estate may be worth more than enough to cover it on paper but still not have the cash HMRC needs.

And that’s where executors can get stuck. The house may eventually provide the money needed once it’s sold, but it can’t normally be sold in full until probate has been granted.

It’s also worth knowing that distributing money from the estate before debts and taxes are settled can mean an executor is personally liable to cover any shortfall that turns up later.

This is one reason that taxes are usually sorted out before the beneficiaries are paid out.

If the deceased’s bank accounts don’t hold enough to cover the bill and instalments aren’t available or don’t go far enough, this is exactly the kind of gap Provira’sEstate Advance is designed to fill.

It gives executors access to up to 50% of the net value of the estate, often within days, so the tax bill can be paid and probate can move forward.

There are no monthly repayments and no personal guarantees, so your own home and savings aren’t put on the line.

We charge simple rather than compound interest and there’s no early repayment charge. The advance itself is repaid from the estate once its assets are released, not from you personally.

How Provira can help

Paying Inheritance Tax before probate puts a lot of executors in an uncomfortable position: the estate is worth enough to cover the bill, but the cash isn’t accessible.

Provira’s Estate Advance gives executors another way to cover that gap. 

If you’re trying to work out how to pay an Inheritance Tax bill before probate is granted,get in touch with the Provira team today. Our team can explain how an Estate Advance works, what it would cost and whether we can help.