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. Crucially, HMRC will not issue the IHT421 (the receipt that releases probate) until at least some payment has been made. As HMRC puts it: "You usually need to make a payment towards any Inheritance Tax due before you can get a Grant of Representation (also known as probate)."

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.

The estate's assets are frozen at death. Bank accounts cannot be drawn on, properties cannot be sold, shares cannot be transferred — none of this is possible until the Grant of Probate is in hand. Yet HMRC requires payment before issuing the document that unlocks the estate.

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 (DPS) is HMRC's most useful provision for executors facing the liquidity gap. It allows banks, building societies, and National Savings & Investments to release funds from the deceased's accounts directly to HMRC to pay Inheritance Tax — 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 is not paid by the 6-month deadline. The rate is set at 4 percentage points above the Bank of England base rate, following changes introduced in April 2025.

As of January 2026, the late-payment interest rate is 7.75% per annum. The rate fluctuates with the Bank of England base rate, so executors should check the current figure on HMRC's published rates page rather than relying on a quoted historical number.

Interest accrues daily from the day after the deadline until the day payment is received. On a £100,000 IHT bill, even a three-month delay at 7.75% adds approximately £1,930 to the cost. On larger estates the figures escalate quickly.

Interest is not deductible from the estate before calculating IHT, unlike the underlying tax itself. It is a real cost to the beneficiaries.

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 loans should be a last resort, not a default. They are appropriate where the estate is illiquid, the Direct Payment Scheme has been exhausted, instalments are not possible, and the alternative is HMRC interest on a very large IHT bill. In those narrow circumstances they can save money. In most other circumstances, the official HMRC mechanisms are cheaper.