You can pay Inheritance Tax without selling your property, but this means either using savings or applying for an Inheritance Tax loan.

For many families across the UK, the biggest worry when a loved one passes away is not just grief, but the fear of losing the family home to settle an Inheritance Tax (IHT) bill. 

Given property prices have gone up exponentially over the last few decades, property often makes up most of an estate’s value. But when the house can’t be sold until probate is granted – but HMRC wants tax paid within six months – the situation can quickly feel overwhelming.

The good news is that selling the home isn’t your only option. With the right support, it’s entirely possible to pay Inheritance Tax in full without having to sell the property at all.

Here, we explain how IHT works when property is involved, why many families face this challenge, and the solutions that can protect your loved one’s home during this difficult time. 

How Inheritance Tax works when property is involved

Inheritance tax is charged at 40% on the part of an estate that sits above the tax-free allowances. These allowances include:

• Nil-rate band – £325,000
• Residence nil-rate band – an extra £175,000 when the home is left to children or grandchildren
• Couples can combine allowances, potentially passing on up to £1 million tax-free

Because property values have risen a lot in recent years, even families that don’t have large savings often find themselves pushed over the threshold, just because of the value of the home.

And while it is important to remember that a spouse or civil partner can inherit a home tax-free, leaving it to children, grandchildren or anyone else may mean a big tax bill.

Can you gift a property to a relative early to avoid Inheritance Tax?

In theory you can. Some families try to lower their future IHT bill by gifting property while still alive. This can work, but only if:

The giver survives seven years after making the gift. (Read more about the 7 year rule here)

They do not continue to benefit from the property (unless paying full market rent)

If the rules aren’t kept to, the property is treated as part of the estate, which means you may still have to pay Inheritance Tax on it. 

Why inheriting property creates cash-flow problems for families

Property is normally the largest and most valuable asset within an estate, but the value of it is also the least accessible. Accessing the value of a property isn’t like inheriting a bank account, it comes with a lot of steps to pull the money out.

For executors, this can put them in a tricky situation:

1. They cannot sell the property until probate is granted.
2. Probate cannot be granted until the Inheritance Tax has been paid.
3. HMRC requires payment within six months of death.
4. Interest is added if the bill is late.
5. Most banks will not release estate funds without probate.

This leaves many families stuck. They want to keep the home, or at least avoid rushing to sell it, but they don’t have access to the money needed to pay HMRC.

This is where Inheritance Tax loans like Provira’s Estate Advance become a lifeline.

Inheritance Tax loans allow you to access up to 50% of the estate early, without worrying about compound interest, late payments or selling assets before you’re ready.

Find out more about Inheritance Tax Loans here.

Paying Inheritance Tax without selling the property

If you find yourself in a position where you do need to pay IHT, there are a few ways that you can settle the bill without putting the home on the market. 

Options include:

Using personal savings

If an executor or family member has enough savings themselves, they can pay the IHT bill and be reimbursed from the estate later.

This can work for smaller bills, but for many families, IHT can run into tens or hundreds of thousands of pounds. Using personal savings can be a good option, but it also adds financial stress at an already emotional time.

If you’re considering this, make sure all payments are documented properly so they can be paid back once the estate is settled.

Using the deceased’s savings

Some banks will allow IHT to be paid directly from the deceased’s bank accounts before probate is issued.

This can help, but again, it’s rare for savings alone to cover the entire bill, especially if the estate’s main value is tied up in the property.

Applying for HMRC’s instalment plan

In some cases, HMRC may allow Inheritance Tax on property to be paid in annual instalments over up to ten years. This can help spread the cost, but it’s important to know that interest is charged daily on any unpaid amount, which can add up quickly. 

It’s also important to know that HMRC may not accept all applications for IHT to be paid in instalments, so it’s not a fool proof plan.

Using an Inheritance Tax loan (estate advance)

For many families, the best way to pay Inheritance Tax ontime and avoid selling the home is an Inheritance Tax Loan, sometimes referred to as a Probate Loan or Estate Advance.

Provira’s Estate Advance is designed specifically for situations where money is tied up in property and the family needs help paying the IHT bill.

How an estate advance works with Provira:

• You can access up to 50% of the total value of the estate within just a few days
• Provira pays the Inheritance Tax directly to HMRC
• There are no monthly repayments
• The loan is repaid only when the estate is settled
• There is no personal liability, no credit checks and no risk to your personal finances
• All lending is secured against the estate, not you

This means you can protect the family home, avoid HMRC interest, move probate forward and give yourself time to make the right decisions, rather than being pushed into a sale you’re not ready for.

If your IHT deadline is approaching and you’re worried about it, please know you’re not alone. 

Provira’s team speaks to families in this exact position every day, and we’re here to take the pressure off. You can start an application or speak with us directly at any time.

Paying Inheritance Tax on a family home

Dealing with Inheritance Tax during grief is emotionally draining. Many families tell us they feel pressured, confused, or even guilty for considering selling the family home.

At Provira, we make sure you never feel like you’re facing this alone, and it’s important to know that you do not have to sell the property just to pay HMRC.

Provira’s Estate Advance exists exactly for this situation, so families can protect their inheritance, pay tax on time and move forward without worrying about finances.

If you’re unsure what to do next or just want to talk through your options, we’re here to help.

Speak to our team today or start your application here. We’ll be with you every step of the way.