If you cannot pay the Inheritance Tax (IHT) bill by the deadline, HMRC will start charging interest on the outstanding amount from the due date. This is usually six months after the person’s death. In some cases, this can cause stress for the executors or there could be a forced sale of estate assets to settle the debt.

Provira offers specialist products to help families and executors struggling to pay off an inheritance tax bill.

An Estate Advance enables Executors to immediately access up to 50% of the net assets within an estate and is specifically designed to pay Inheritance Tax.  

Inheritance Tax is a common concern for many families in the UK, especially as house prices rise. According to HMRC, over £7 billion was collected in IHT in the 2023–24 tax year, which was the highest amount ever recorded. Despite this, many executors still find themselves unprepared for how and when payment is due.

When is inheritance tax tax?

Inheritance Tax must be paid by the end of the sixth month after the person’s death. For example, if someone dies in January, the tax is due by the end of July. 

It is usually the responsibility of the executor or personal representative of the estate to ensure the payment is made on time.

If the deadline is missed, interest starts to build immediately on the unpaid balance. HMRC charges daily interest, which can quickly add up if the estate is complicated or delays occur.

What if the estate has no cash to pay the inheritance tax?

Having no cash in the estate is a common issue, particularly when most of the estate’s value is tied up in property. 

In these cases, executors can apply to pay the tax in installments over ten years, but this option is only available for certain assets like houses or shares.

Alternatively, executors may be able to access loans such as estate advances or bridging finance as solutions, either through banks or specialist providers like Provira.

Can assets be sold before the inheritance tax is paid?

Yes, but with restrictions. In most situations, HMRC will not grant probate, which gives legal authority to manage the estate, until some or all of the Inheritance Tax is paid. This creates a tricky situation where executors cannot sell assets without probate but need funds from those assets to pay the tax.

To resolve this, HMRC allows something called the “grant on credit” in certain cases. This means probate can be issued before full payment, allowing the sale of assets to go ahead and the tax to be paid shortly after.

Are there any other penalties for inheritance tax other than interest?

While HMRC’s primary penalty is interest on unpaid inheritance tax, they may also impose fines if they believe the executor has been careless or deliberately misled them. 

If a tax return is inaccurate or submitted late, financial penalties can be applied in addition to interest.

It is essential to keep clear records and communicate with HMRC if delays are likely. Prompt engagement can often reduce the risk of penalties and help find a manageable solution.

What help is available if you cannot pay your inheritance tax?

HMRC is generally open to communication and offers payment plans where appropriate. Executors can contact the Inheritance Tax helpline to discuss options. In some cases, it’s possible to negotiate short term arrangements to ease the burden.

Legal and financial advice is strongly recommended if payment is proving difficult. A qualified probate solicitor or tax adviser can often find routes to unlock funds or negotiate better terms.

Should you prepare to pay inheritance tax in advance?

Yes, careful planning before death can make a huge difference. Discussing IHT during life can help beneficiaries avoid being caught off guard. Gifting assets earlier, setting up trusts or taking out life insurance to cover the tax bill are all options that can ease the burden.

In conclusion, if you cannot pay the Inheritance Tax bill, interest will start to accrue, but you do have options. From Government support, instalment plans and inheritance advances loans, there are ways to manage the situation with the right support. 

The key is to act early, keep HMRC informed and seek advice if needed. While it may feel overwhelming at first, proper planning and communication can help you navigate IHT with confidence.