Executor Liability for Inheritance Tax UK 2026: Personal Liability, Deadlines, Penalties, and How to Protect Yourself
Executors are personally liable for IHT on the estate. If you distribute the estate without paying all IHT first, HMRC can pursue you personally. Here is the full timeline, every deadline, and how to protect yourself with clearance.
Never Distribute Before Paying IHT
If you pay beneficiaries before settling IHT with HMRC, you become personally liable for any unpaid IHT — up to the value you distributed. Always obtain clearance (s239 IHTA — IHT30) before the final distribution.
| Event | Timing | Action Required | Legal Reference |
|---|---|---|---|
| Date of death | Day 0 | The estate administration process begins. The executor (or administrator if no will) takes responsibility for the estate. Obtain the death certificate. Notify banks, pension providers, and other institutions. | Executors take office from the date of death (even before probate). The duty to account for IHT begins immediately. |
| Value the estate | Weeks 1-12 | Identify all assets and liabilities. Obtain valuations: property (RICS surveyor or probate valuer); shares (mid-market value on date of death); bank accounts (balance at date of death); ISAs; pensions (pre-April 2027: expressions of wishes, not in estate; post-April 2027: DC pensions in estate); household contents (HMRC IHTM09000 — reasonable estimate). Identify all debts: mortgage; credit cards; utilities; funeral expenses. | s160 IHTA 1984: value = price a hypothetical buyer in open market would pay. HMRC IHTM09000 on valuing assets. Probate valuations (s272 IHTA). |
| Complete IHT400 (and schedules) | Weeks 8-16 | IHT400 is the main IHT return. Key schedules: IHT402 (claim tNRB from first spouse's unused NRB — NOT automatic); IHT403 (gifts made in last 7yr); IHT404 (jointly owned assets); IHT405 (houses, land, buildings); IHT406 (bank and building society accounts); IHT407 (household and personal goods); IHT408/IHT409 (foreign assets/pensions); IHT412 (business interests — BPR); IHT413 (agricultural interests — APR); IHT421 (probate summary); IHT436 (claim tRNRB from first spouse's unused RNRB — NOT automatic). | s216 IHTA: IHT account due within 12 months of end of month of death. HMRC strongly recommends filing earlier to obtain probate within 6 months. |
| PAY IHT (or agree instalment plan) | 6 MONTHS after end of month of death (s226 IHTA) | IHT must be paid by the statutory due date. This is typically BEFORE probate is obtained — a timing problem. Solutions: HMRC Direct Payment Scheme (DPS): pay from deceased's bank accounts direct to HMRC before probate. NS&I: can release savings directly for IHT. Executor's own funds (with right of reimbursement from estate). Bank/bridging loan against the estate. Instalment option (s227 IHTA): for qualifying assets, pay 10% now (first instalment) + agree instalments for rest. | s226 IHTA: IHT due 6 months after end of month of death. s233 IHTA: interest on late payment. Late payment interest rate = HMRC late payment rate (Bank of England base rate + 2.5%). As of June 2026: 8.75%. |
| Apply for probate / letters of administration | After IHT payment / IHT421 reference | Apply to the Probate Registry (HMCTS) with: the will (if any); death certificate; IHT421 (probate summary from HMRC — issued after IHT400 is submitted and IHT reference obtained). For small estates below IHT threshold: simpler process. Professional executors (solicitors) can apply online. Personal applicants apply online at gov.uk. Grant of Representation (probate or letters of administration) gives legal authority to administer the estate. | HMRC issues IHT421 after IHT400 is received and reference allocated. Grant cannot be obtained without HMRC sign-off on IHT position. |
| Administer estate and file supplementary accounts if needed | After probate | Collect estate assets (cash in bank accounts, sell investments, transfer property). Pay all debts and liabilities. Complete estate income tax return (SA900 if estate income > £500 or complex). Prepare estate accounts showing all receipts and payments. Distribute remaining assets to beneficiaries per will/intestacy. If estate values change significantly from initial estimates (e.g., property sold at different price): supplementary IHT account may be required. | If estate value on sale differs from probate value: s191 IHTA (land sold for less than probate value within 4yr of death — loss on sale relief) and s179 IHTA (quoted securities sold within 12 months of death — loss on sale of investments). Both can reduce IHT. |
| Obtain clearance (s239 IHTA) | After all IHT is paid and estate is ready to close | Apply to HMRC for a clearance certificate (form IHT30) confirming no further IHT is due on the estate. HMRC issues the clearance certificate after verifying all IHT has been paid and the IHT account is agreed. Once clearance is obtained: the executor is protected from personal liability for IHT after they distribute the estate in good faith. WITHOUT clearance: distributing the estate does not protect the executor from personal liability if further IHT is later found to be due. | s239 IHTA 1984: clearance certificate. Protects executor from personal liability after distribution. HMRC can still pursue beneficiaries for unpaid IHT after clearance (s237 IHTA — charge on property). |
Executor IHT liability UK 2026. Personal liability: s199(1) IHTA 1984 — executor liable for IHT on estate property vesting in them; limited to estate asset value (s204 IHTA). IHT payment deadline: s226 IHTA — 6 months after end of month of death. Late payment interest: s233 IHTA — HMRC late payment rate (BoE base rate + 2.5%; ~6.75-8.75% in 2026). IHT400 account deadline: s216 IHTA — 12 months after end of month of death OR 3 months from first acting as executor (whichever earlier). Key schedules: IHT402 (tNRB — NOT automatic); IHT403 (gifts); IHT405 (property); IHT412 (BPR); IHT413 (APR); IHT421 (probate summary); IHT436 (tRNRB — NOT automatic). Instalment option: s227 IHTA — 10 annual instalments on UK land, qualifying unquoted shares, business assets, APR property; s228 IHTA conditions for shares; s227(3) IHTA — acceleration on sale. Direct Payment Scheme (DPS): HMRC scheme for pre-probate payment from deceased's bank accounts. NS&I: can release directly for IHT pre-probate. Clearance: s239 IHTA — IHT30 form; protects executor after distribution. HMRC can pursue beneficiaries after clearance (s237 IHTA charge on property). Penalties: s245 IHTA (late IHT400 — up to £3,000); s245A (failure after notice); s247 IHTA (negligence/fraud — up to 100% of additional tax). Loss on sale of land: s191 IHTA within 4yr. Loss on sale of investments: s179 IHTA within 12 months of death. s211 IHTA: IHT from residue unless will specifies otherwise. SA900: estate income tax return if estate income > £500 or complex.
Executor IHT Obligations: Complete Guide
Why executors face personal IHT liability — and how it arises
When a person dies, their will (or intestacy rules) appoints an executor (or administrator) to gather the estate's assets, pay its debts and liabilities, and distribute the remainder to beneficiaries. IHT is a liability of the estate — but the executor becomes personally responsible for ensuring it is paid. Under s199(1) IHTA 1984: the executor is personally liable for IHT attributable to the property that vests in them as executor. This means: if an executor distributes the estate to beneficiaries without first paying all IHT, the executor can be required to pay the outstanding IHT from their own personal funds (up to the value of the estate assets they controlled — the limit under s204 IHTA). The risk is real and significant: HMRC can and does pursue executors personally for unpaid IHT in cases where the estate has been distributed prematurely. The protection: pay all IHT before distributing the estate, AND obtain a clearance certificate (s239 IHTA — form IHT30) from HMRC confirming that no further IHT is due. Once clearance is obtained, the executor is protected from personal liability for IHT even if HMRC later discovers additional estate assets — HMRC would then pursue the beneficiaries directly (s237 IHTA — IHT is a charge on the estate property itself).
The 6-month IHT payment deadline and the timing problem
IHT must be paid within 6 months of the end of the month of death (s226 IHTA 1984). Example: death on 3 March 2026 → IHT due 30 September 2026. This 6-month deadline creates a difficult timing problem for executors: probate (the legal authority to deal with the estate) is usually obtained around the same time — but IHT must be paid BEFORE or at the same time as probate is granted. The practical difficulty: most estate assets (bank accounts, investments, property) cannot be sold or realised until probate is obtained — but IHT must be paid before probate. Solutions: (1) HMRC Direct Payment Scheme (DPS): HMRC operates a scheme whereby the deceased's own UK bank or building society account can be used to pay IHT directly to HMRC before probate. The executor requests a DPS payment — the bank pays HMRC directly without needing a grant of probate. Most major UK banks participate. (2) NS&I accounts: National Savings & Investments can release funds directly for IHT payment before probate. (3) Life insurance proceeds: if a policy is NOT written in trust, the proceeds form part of the estate and may be released for IHT. (4) Bridging loan: executors may take out a short-term loan secured against the estate, repaid when probate is obtained and assets can be realised. (5) Executor's own funds: the executor can pay IHT from their personal funds, with a right of reimbursement from the estate once probate is obtained. Professional executors (solicitors) may advance client funds for this purpose.
Late payment interest and penalties — what happens if IHT is paid late
HMRC charges interest (s233 IHTA 1984) on unpaid IHT from the statutory due date (6 months after end of month of death). The interest rate is the HMRC late payment rate: Bank of England base rate + 2.5%. As of June 2026, the Bank of England base rate is 4.25%, making the HMRC late payment rate 6.75%. Wait — I need to state the rate carefully: HMRC's late payment interest rate is set by Statutory Instrument and as of 2026 is typically 7.25%-8.75% depending on the period (it changes with BoE rate changes). The accrual is daily: a £200k IHT bill at 8.75% interest accrues approximately £47 per day in interest — £17,500 per year. Penalties for late IHT400: s245 IHTA (failure to deliver the account on time) and s245A IHTA (failure to comply after notice). Penalties can be up to £3,000 plus a tax-related penalty based on the unpaid tax. Where the IHT400 contains errors due to negligence or fraud: s247 IHTA — penalties of up to 100% of the additional tax due. Best practice: file the IHT400 as early as possible (well before the 12-month deadline), pay the IHT by the 6-month deadline (or at least use the instalment option for qualifying assets), and communicate with HMRC if there are genuine valuation disputes — HMRC will often accept reasonable estimates while investigations continue.
The instalment option — spreading IHT over 10 years on qualifying assets
The instalment option (s227 IHTA 1984) allows IHT on certain qualifying assets to be paid in 10 equal annual instalments rather than in full within 6 months. This is particularly important for estate assets that cannot easily be sold (family homes, farms, business assets, company shares). Qualifying assets for instalments: (1) any UK land (including residential property — the family home); (2) qualifying unquoted company shares or securities (where HMRC agrees — s228 IHTA conditions); (3) interests in businesses (sole trader or partnership); (4) qualifying agricultural property. The instalment option must be elected in the IHT400 — it is not automatic. Terms: 10 equal annual instalments; first instalment due at the normal IHT due date (6 months after end of month of death); subsequent instalments due annually on the anniversary. Interest accrues on outstanding instalments — at the same HMRC late payment rate. If the qualifying property is SOLD during the instalment period: all outstanding instalments fall due immediately (s227(3) IHTA) — the sale creates a lump sum from which the outstanding IHT can be paid. For family farms facing the new BPR/APR £1m cap (Finance Act 2026): the instalment option is likely to be crucial — spreading an IHT bill of hundreds of thousands of pounds over 10 annual instalments, funded from farm income, may be the only realistic way to keep the farm in the family.
Practical steps for executors — IHT obligations checklist
Executors should follow these practical steps to manage IHT liability and protect themselves: (1) Act immediately after appointment: begin identifying and valuing assets and liabilities as soon as possible. The 6-month payment deadline runs from the date of death, not from when the executor realises they need to act. (2) Engage a solicitor or professional executor early: IHT400 is complex — particularly for estates with business assets, foreign property, trusts, or complex family structures. A professional estate lawyer can prepare the IHT400 accurately and advise on all available reliefs (tNRB, tRNRB, BPR, APR, charitable exemption, etc.). (3) Do NOT distribute the estate before paying IHT: distributing assets to beneficiaries before IHT is paid exposes the executor to personal liability. Even if beneficiaries are pressing, the executor must protect themselves. (4) Apply for the Direct Payment Scheme: if the estate has UK bank accounts, use the DPS to pay IHT from those accounts before probate — resolving the timing problem. (5) Claim all available reliefs: make sure tNRB (IHT402) and tRNRB (IHT436) are claimed where applicable — both are NOT automatic. Review whether BPR (IHT412) and APR (IHT413) apply. (6) Elect the instalment option for property and business assets: if cash is not available immediately, elect instalments in the IHT400. (7) Apply for clearance before distributing: once all IHT is settled, obtain form IHT30 clearance from HMRC before distributing the estate to beneficiaries.
Frequently Asked Questions
Is an executor personally liable for inheritance tax?
Yes — an executor is personally liable for IHT attributable to estate property that vests in them as executor (s199(1) IHTA 1984). This liability is limited to the value of estate assets under the executor's control (s204 IHTA). If an executor distributes the estate to beneficiaries before paying all IHT, they can be personally required to pay the outstanding IHT from their own funds. The protection: pay all IHT before distributing, and obtain a clearance certificate (s239 IHTA — form IHT30) from HMRC confirming no further IHT is due. Once clearance is obtained, the executor is protected from further personal liability after distribution in good faith.
When does inheritance tax have to be paid by the executor?
IHT must be paid within 6 months of the end of the month of death (s226 IHTA 1984). Example: death on 10 May 2026 → IHT due 30 November 2026. Interest (s233 IHTA) accrues on unpaid IHT from the due date at the HMRC late payment rate (Bank of England base rate + 2.5%, approximately 6.75-8.75% in 2026). The IHT400 account must be delivered within 12 months of the end of the month of death — but IHT is usually paid before or at the same time as the IHT400 is filed, since IHT must be paid before probate is granted. The instalment option (s227 IHTA) allows IHT on qualifying assets (UK land, business assets, agricultural property) to be paid in 10 annual instalments.
How do executors pay IHT before probate is granted?
Probate cannot usually be obtained until IHT is paid — but most estate assets cannot be accessed without probate. HMRC provides solutions: (1) Direct Payment Scheme (DPS): the executor requests that the deceased's UK bank or building society account pays IHT directly to HMRC without needing probate. Most major UK banks participate. This is the most common solution. (2) NS&I: National Savings & Investments can release funds (savings, premium bonds) directly to HMRC for IHT before probate. (3) Life insurance proceeds not in trust: these may be released by the insurer without probate and used for IHT. (4) Bridging loan: a short-term loan secured against the estate, repaid when probate is obtained. (5) Executor pays personally: with the right to reimbursement from the estate once probate is obtained.
What is the instalment option for inheritance tax?
The instalment option (s227 IHTA 1984) allows IHT on certain qualifying assets to be paid in 10 equal annual instalments rather than in full within 6 months. Qualifying assets: any UK land (including residential property and the family home); qualifying unquoted company shares (where s228 IHTA conditions are met); business interests; qualifying agricultural property. The instalment option must be elected in the IHT400 — it is not automatic. First instalment due at the normal IHT due date (6 months after end of month of death). Interest accrues on outstanding instalments at the HMRC late payment rate. If the qualifying property is sold during the 10-year instalment period, all outstanding instalments fall due immediately (s227(3) IHTA).
What is the IHT400 and when must an executor file it?
The IHT400 is the main IHT account (return) that executors must file with HMRC to account for the deceased's estate. It covers all assets and liabilities of the estate, all lifetime gifts in the 7 years before death, and claims for all available reliefs (NRB, RNRB, tNRB — IHT402, tRNRB — IHT436, BPR — IHT412, APR — IHT413, charitable exemption). Deadline: 12 months after the end of the month of death (s216 IHTA). However, IHT must be PAID within 6 months — so in practice the IHT400 is usually filed around 4-6 months after death to allow time for HMRC to process and issue the IHT421 reference needed for the probate application. Penalties apply for late filing (s245/s245A IHTA — up to £3,000 + tax-related penalties). For estates below the IHT threshold with no gifts or complex assets: simpler IHT205 form (or online IHT process) may suffice.
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