Do You Have to Pay Inheritance Tax Before Probate?
28th March, 2025
Inheritance Tax (IHT) can be one of the most confusing and stressful aspects of dealing with an estate after the death of a loved one.
But the question is… do you have to pay inheritance tax before probate?
The answer isn’t always straightforward, as it depends on various factors, including the value of the estate, available funds, and legal requirements.
Keep reading as we break down what you need to know about IHT and probate below…
What is Inheritance Tax?
Inheritance Tax is a tax on the estate of a deceased person, including their property, money, and possessions.
In the UK, the standard IHT rate is 40% on the portion of an estate exceeding the tax-free threshold of £325,000. However, if more than 10% of the estate is left to charity, the tax rate can be reduced to 36%.
This threshold has been in place since 2009 – and will remain frozen until the 2027-2028 tax year.
Some estates qualify for extra tax relief, like the Residence Nil Rate Band (RNRB). This allows you to pass on property to your children or grandchildren with a higher tax-free limit, reducing the amount of IHT owed.
Do You Have to Pay Inheritance Tax Before Probate?
Yes, in most cases, Inheritance Tax must be paid before probate is granted.
HMRC typically requires IHT to be settled by the end of the sixth month after the person’s death. Failure to pay by this deadline may result in interest charges on the outstanding amount.
Since probate is the legal process of administering the deceased’s estate, most financial institutions and legal bodies will not release funds or assets until probate is officially granted.
But if inheritance tax is due before probate, how do you pay it when you can’t yet access the deceased’s funds?
How to Pay Inheritance Tax Before Probate
This is a common challenge for executors, but there are several solutions to consider:
1. Direct Payment from the Estate
Many banks and financial institutions allow the Direct Payment Scheme (DPS), which enables HMRC to collect IHT directly from the deceased’s accounts. The executor or administrator will need to complete Form IHT423 to authorise the payment.
2. Short-Term Loans or Executor Loans
If the estate lacks sufficient liquid assets, executors may need to seek short-term loans to cover the IHT bill. Some banks and specialist lenders offer executor loans specifically designed for this purpose. These are repaid once probate is granted and estate funds become accessible.
3. Paying in Instalments
For estates with illiquid assets, HMRC allows IHT on certain assets (e.g., land, property, or business interests) to be paid in instalments over ten years. However, interest accrues on the unpaid balance. This option provides flexibility if selling assets immediately isn’t feasible.
4. Using Life Insurance Policies
Putting a life insurance policy in trust can help cover IHT without needing to sell assets or take out loans. Since the payout sits outside the deceased’s estate, it’s tax-free and accessible before probate is completed.
What Happens If You Can’t Pay Inheritance Tax Before Probate?
If you cannot settle the IHT bill within the required timeframe, HMRC will charge interest on late payments, and probate could be delayed. If you need the most up-to-date rate, it’s best to check the official HMRC website.
This could create financial problems for beneficiaries who are relying on their inheritance. To avoid this, executors should explore all available options as early as possible.
Seeking professional advice from an experienced tax specialist can help navigate these challenges efficiently.
So, Do You Have to Pay Inheritance Tax Before Probate?
In most cases, yes – you do have to pay inheritance tax before probate.
The key is preparation.
Act early and seek expert guidance to avoid unnecessary delays, penalties, and financial stress.
If you’re facing IHT challenges, don’t hesitate to reach out to Haggards Crowther for professional support.
Get Expert Help with Inheritance Tax & Probate
Dealing with IHT and probate can be overwhelming, especially during an already difficult time.
At Haggards Crowther, we have extensive experience guiding clients through the IHT process, ensuring compliance while minimising tax liabilities.
If you need expert advice on Inheritance Tax or probate, contact us today via our contact form or email us at enquiries@haggards.co.uk. We’ll help you navigate the process smoothly and ensure you meet all necessary deadlines.
Don’t miss out on our free 30-minute consultations – get in touch today!
