The 6-Month Inheritance Tax Deadline Explained

HMRC's rule is straightforward: "You must pay Inheritance Tax by the end of the sixth month after the person died." If the death occurred on 14 January, the IHT deadline is 31 July of the same year.

This applies regardless of whether the Grant of Probate has been issued. Where Inheritance Tax is due, a payment is usually needed before the grant can proceed. The administrative steps and evidence sent between HMRC and HMCTS can change, so follow the current GOV.UK process for the date of the application.

The result is a structural problem for many executors: tax is due before the legal mechanism that lets them access the estate's assets. Probate typically takes 9-12 months; IHT is due at month 6. This 3-6 month liquidity gap is one of the defining challenges of estate administration.

Access to many estate assets is restricted before the Grant of Probate. Institutions have their own release rules, and property generally cannot be transferred by the personal representatives without the grant. The Direct Payment Scheme and some institution-specific release procedures can nevertheless make funds available for tax or other limited purposes.

For a typical estate where IHT is due, this creates one of three scenarios. Either the executor pays personally and waits to be reimbursed from the estate (rare, given the sums involved). Or the family takes on a short-term loan — sometimes referred to as an inheritance loan or executor loan — to bridge the gap. Or the executor uses one of the official mechanisms HMRC provides for paying tax before probate.

Understanding these official mechanisms early is essential. Executors who only discover them at month 5 often run out of options.

The Direct Payment Scheme can allow participating banks, building societies and National Savings & Investments to release funds from the deceased's accounts directly to HMRC before probate has been granted.

To use the scheme, the executor completes form IHT423 alongside the IHT400 and submits it to the relevant institution. The institution then pays HMRC directly, and the receipt is recorded against the estate. This avoids the executor having to find the money personally or take on a loan.

Most major banks, building societies, and stockbrokers participate in the scheme, but not all. Executors should check with each institution holding deceased's funds to confirm participation before relying on it. Some institutions are slower than others, so submitting IHT423 early in the process gives the best chance of clearing the IHT bill by the 6-month deadline.

For certain "illiquid" assets that cannot easily be sold to raise cash, HMRC permits payment of IHT in 10 yearly instalments. This is set out in section 227 IHTA 1984 and is designed to prevent forced sales of family homes or family businesses purely to fund IHT.

Qualifying assets include:

The first instalment is due at the same time as the standard IHT deadline — the end of the sixth month after death. Subsequent instalments are due annually on that same date for the following nine years.

Interest treatment varies by asset type. For agricultural and business relief assets where the conditions remain met, instalments are interest-free if paid on time. For other qualifying assets (residential property, for example) interest accrues on the outstanding balance from the original due date, although the first instalment is itself interest-free if paid by the deadline.

The instalment option is lost as soon as the qualifying asset is sold. If the executor sells the deceased's house in year three of the instalment plan, the entire remaining IHT becomes payable immediately on the proceeds. This catches some executors off-guard and is worth flagging to beneficiaries before any sale.

HMRC charges interest on Inheritance Tax that remains unpaid after the applicable deadline. The rate can change, so check HMRC's current published interest rates rather than relying on a figure quoted in an article.

Interest generally runs from the day after the due date until payment. The amount depends on the outstanding tax, the rate applying over the period and how long payment is late.

Late-payment interest does not reduce the value on which Inheritance Tax is calculated. It is an additional cost of the estate administration.

Acting promptly during the first three months after death is the single most effective protection against the 6-month deadline. The actions below take days, not weeks, but solve months of trouble later.

If none of the official mechanisms work for the estate's circumstances, specialist lenders offer "inheritance loans" or "executor loans" — short-term finance secured against the executor's expected inheritance. These typically run for 6-18 months at rates higher than ordinary mortgages.

Inheritance or executor loans can be expensive and may involve regulated credit activity. Compare total costs with the estate's other payment options and obtain appropriate legal or financial advice before proceeding.