When Is Inheritance Tax Due UK (2026): The 6-Month Deadline, Interest and What to Do If You Can't Pay

The inheritance tax due date is fixed by IHTA 1984 s.226(1): IHT must be paid by the end of the sixth month after the MONTH in which the death occurred. The calculation is: (1) IDENTIFY THE MONTH OF DEATH — not the day; the whole month counts; (2) COUNT SIX FULL CALENDAR MONTHS from the end of that month; (3) THE DUE DATE IS THE LAST DAY of that sixth month. WORKED EXAMPLES: (a) Death on 3 January 2026 → month of death = January → add 6 months → due date = 31 July 2026; (b) Death on 28 March 2026 → month of death = March → due date = 30 September 2026; (c) Death on 15 November 2026 → month of death = November → due date = 31 May 2027; (d) Death on 1 January → due date = 31 July (same year). CRITICAL POINT — IT IS THE MONTH, NOT THE DATE: if someone dies on 31 January, you do NOT add 6 months from 31 January (which would give 31 July) — you get the same answer, but a death on 1 January also gives 31 July. The month is the unit. WHY THIS MATTERS: a death on 31 July gives a due date of 31 January (not 28/29 February) — the 6 months always land on the last day of a calendar month. PROBATE TIMELINE: the IHT400 (or IHT205/IHT217 for excepted estates) must be submitted to HMRC before probate is granted. Probate cannot be obtained until at least some IHT is paid. The 6-month clock starts running from the date of death regardless of when probate is applied for or granted. EARLY PAYMENT: IHT can be paid before the due date — there is no minimum waiting period. Executors often prefer to pay early to avoid interest and to get probate granted faster. TAX RETURN DEADLINES: the IHT400 has no official filing deadline separate from the payment deadline, but it must accompany the probate application. For lifetime transfers (CLTs and PETs within 7 years), the due date differs: CLT — 6 months after the chargeable quarter end; PET — 6 months after the month of death. This guide focuses on death estates.

Missing the IHT payment deadline has immediate financial consequences under IHTA 1984 s.233: (1) INTEREST FROM THE DUE DATE: interest accrues automatically from the day after the due date. There is NO grace period. The official rate is set by HMRC and linked to the Bank of England base rate — as of 2026 it is approximately 7.25% per annum (the late payment interest rate, currently base rate + 2.5%). Interest compounds daily. On a £100,000 IHT bill: 1 month late ≈ £604 interest; 6 months late ≈ £3,625; 12 months late ≈ £7,250 (approximate, at 7.25%). (2) INTEREST IS NOT TAX-DEDUCTIBLE: IHT interest is not deductible for income tax or any other tax — it is a straight cost to the estate; (3) NO AUTOMATIC PENALTY for late payment of IHT (unlike self-assessment income tax which has percentage surcharges). HMRC does not impose a fixed percentage penalty on top of the interest for late IHT payment. The interest IS the sanction; (4) PROBATE CANNOT BE GRANTED until IHT is paid (at least the non-instalment portion). If the executors fail to pay, probate is delayed and administration is frozen — the estate cannot be wound up; (5) HMRC ENFORCEMENT: once interest accrues, HMRC can pursue the PRs (Personal Representatives) personally if the estate has insufficient assets. Executors have personal liability if they distribute the estate and IHT remains unpaid — this is called devastavit; (6) IHT ON LIFETIME TRANSFERS (PETs/CLTs): the 7-year rule means IHT can arise years after a gift. HMRC has 4 years from the filing date to raise an IHT assessment; 6 years where there has been fraud or negligence; 20 years for deliberate concealment. PRACTICAL ADVICE: if you cannot pay by the deadline, contact HMRC's Inheritance Tax helpline proactively. HMRC is generally willing to agree a short time-to-pay arrangement if the estate has assets that will be realised shortly (e.g. house on the market). Agreeing upfront minimises interest and avoids enforcement.

IHTA 1984 ss.227-229 allow IHT on certain assets to be paid in 10 equal annual instalments rather than as a lump sum. This is a critical relief for estates with illiquid assets: (1) QUALIFYING ASSETS FOR INSTALMENT OPTION: (a) Land and buildings (freehold and leasehold) — whether in the UK or abroad (s.227(1)(a)); (b) A business or interest in a business — including a sole trader business or partnership share (s.227(1)(b)); (c) Shares in an unquoted company where HMRC is satisfied that payment in one sum would cause undue hardship, or the shares gave the deceased control of the company (s.228(1)); (d) Shares in a quoted company where the deceased had control (s.228(1A)); (2) HOW THE INSTALMENT OPTION WORKS: the total IHT attributable to the qualifying asset is divided by 10; the first instalment is due on the normal 6-month due date; subsequent instalments fall due on each anniversary of the due date; (3) INTEREST ON INSTALMENTS — THE CRITICAL DISTINCTION: (a) LAND: interest accrues on outstanding instalments from the due date — even if instalments are paid on time. You pay each instalment PLUS interest on the outstanding balance; (b) BUSINESS PROPERTY (qualifying under BPR) and AGRICULTURAL PROPERTY (qualifying under APR): NO interest on outstanding instalments for property qualifying for 100% or 50% BPR/APR — a major advantage; (c) SHARES: interest-bearing unless the company qualifies for BPR; (4) SALE TRIGGERS IMMEDIATE PAYMENT: if the qualifying asset is SOLD during the 10-year period, all remaining IHT instalments (plus accrued interest) become immediately payable on the date of sale (s.227(4)). This catches executors who plan to sell the property after obtaining probate — they cannot use the instalment option and then pocket sale proceeds without paying the outstanding IHT; (5) ELECTION FOR INSTALMENT OPTION: executors must ELECT for the instalment option on form IHT400 (Schedule IHT400 Calculation); (6) MINIMUM FIRST PAYMENT: at least the first instalment (1/10 of the IHT) must be paid before probate is granted, along with all non-instalment IHT.

One of the most common practical problems in estate administration is that IHT must be paid before probate, but the estate's assets are frozen until probate is granted. This creates a circular dependency: (1) THE CHICKEN-AND-EGG PROBLEM: the Probate Registry requires sight of an IHT421 (clearance certificate or acknowledgement) before issuing the Grant. HMRC issues IHT421 only after IHT is paid. But the estate's bank account is frozen until the Grant is obtained. How do you pay IHT without access to funds? (2) SOLUTION 1 — DIRECT PAYMENT SCHEME (IHT423): most UK banks and building societies participate in the Direct Payment Scheme. The executor can instruct the deceased's bank to pay IHT directly to HMRC using form IHT423 without requiring probate first. The bank transfers funds straight from the deceased's account to HMRC's account. The executor fills in IHT423 for each bank, sends it to HMRC with the IHT400, and HMRC confirms the payment before issuing IHT421. NOT ALL ASSETS QUALIFY — the scheme only works for: bank and building society accounts; NS&I accounts (Premium Bonds can be encashed pre-probate for IHT); it does NOT work for stocks and shares, investment funds, or cash in a stocks and shares ISA; (3) SOLUTION 2 — PERSONAL LOAN: the executor (or a beneficiary) takes a personal loan to fund the IHT payment; the estate reimburses on obtaining probate; interest cost is modest for a short bridging period; (4) SOLUTION 3 — SELL MOVEABLE ASSETS: personal chattels (jewellery, art, cars) can be sold without probate; proceeds used to pay IHT; note: undervalue sales may generate IHT disputes; (5) SOLUTION 4 — PROBATE LOAN: specialist lenders offer 'probate loans' (also called executor loans or estate administration loans) secured against the estate; interest rates are higher than standard loans; repaid when estate is wound up; (6) SOLUTION 5 — NS&I INVESTMENTS: Premium Bonds can be repaid without probate up to the NS&I limit (currently no specific cap for death claims). NS&I will pay out directly to HMRC for IHT; (7) SOLUTION 6 — INHERITANCE TAX INSTALMENT OPTION (for property — see above): elect instalments; pay only 1/10 initially; get probate; sell property; pay remaining 9/10.

Where the estate cannot meet the IHT deadline through normal means, there are formal and informal options: (1) HMRC TIME-TO-PAY ARRANGEMENTS: HMRC has a discretionary power to agree deferred payment with interest under s.233. Executors should contact the HMRC Inheritance Tax helpline (0300 123 1072) BEFORE the deadline, not after. HMRC expects: (a) a clear explanation of why the estate is illiquid; (b) evidence that steps are being taken to realise assets (e.g. property on the market, shares being sold); (c) a realistic timeline for payment. HMRC will typically agree a short extension (3-6 months) with interest accruing. Time-to-pay does NOT stop interest — it merely avoids formal enforcement action; (2) HMRC DISCRETION UNDER S.239(2): in exceptional cases HMRC may waive interest entirely under s.239(2) IHTA 1984, but this is rare and requires genuine hardship; (3) OVERSEAS ASSETS — ADDITIONAL FLEXIBILITY: where assets are overseas and take time to realise (foreign probate; foreign bank accounts; overseas real estate), HMRC generally accepts that payment will follow realisation; the instalment option is available for overseas land; (4) ILLIQUID BUSINESS ASSETS: where the estate's main asset is an interest in a private company or partnership, and BPR does not fully cover the IHT, HMRC will usually accept a time-to-pay arrangement pending a share sale or buyout; (5) DEFERRED PAYMENT ON HERITAGE PROPERTY: where the estate contains heritage property (conditionally exempt under IHTA 1984 s.31 — historic houses, works of art, scientific collections), IHT can be deferred indefinitely while the undertaking is maintained; (6) INTEREST AS AN ESTATE EXPENSE: IHT interest is an administration expense of the estate — it reduces the estate available for beneficiaries. Executors must account for it in estate accounts. It is not separately deductible against estate income for income tax; (7) PRACTICAL CHECKLIST FOR EXECUTORS: (a) Calculate the due date immediately on death; (b) Identify all liquid assets (bank accounts, NS&I); (c) Use Direct Payment Scheme (IHT423) first; (d) Submit IHT400 early — HMRC processing takes 2-4 weeks; (e) If property-heavy, elect instalment option; (f) If illiquid, contact HMRC early to agree timeline; (g) Obtain probate, administer estate, pay balance.