Paying Inheritance Tax Before Probate UK: How to Fund the IHT Bill

Updated: 01 June 2026 • Reading time: 8 min

One of the most frustrating aspects of estate administration in England and Wales is the inheritance tax catch-22: you must pay IHT before HMRC will issue the clearance needed for probate, but you cannot access the deceased’s funds without a grant of probate. This guide explains exactly how to break out of this loop — using the Direct Payment Scheme, the instalment option for property, NS&I products, personal executor funding, and bridging finance where necessary.

The IHT “Catch-22”: Why It Exists

Under the Inheritance Tax Act 1984, IHT on most assets is due by the end of the sixth month after the month of death. For example, a death on 15 April 2025 means the IHT deadline is 31 October 2025.

The probate process works like this: executors submit the IHT400 account and pay the IHT; HMRC then sends an IHT421 Probate Summary to HMCTS confirming the position; HMCTS will only issue the grant of probate once it has received the IHT421. The grant of probate is the document that gives executors legal authority to collect and distribute the estate’s assets.

The problem: the deceased’s bank accounts are frozen pending probate. Without a grant, executors have no authority to withdraw money to pay the IHT bill. This circle must be broken using one of the solutions below.

Solution 1: The Direct Payment Scheme (IHT423)

The Direct Payment Scheme (DPS) is HMRC’s primary solution to the catch-22. Most major UK banks, building societies, and NS&I participate. The scheme works as follows:

1. The executor completes the IHT400 inheritance tax account and calculates the total IHT due.
2. For each participating institution where the deceased held cash, the executor completes a separate IHT423 form. This authorises the institution to pay a stated amount of IHT directly to HMRC.
3. The IHT423 is sent to the institution (not to HMRC). The institution pays HMRC directly and sends the executor confirmation of payment.
4. Once HMRC has received all the IHT (or has the DPS payment in progress), it processes the IHT400 and issues the IHT421 Probate Summary to HMCTS electronically.
5. HMCTS receives the IHT421 and the probate application can proceed. The grant is then issued and the executor can administer the estate.

Participating institutions include all major high-street banks (Barclays, HSBC, Lloyds, NatWest, Santander), most building societies, and NS&I. Check the current HMRC list of participating institutions before submitting — institutions can join or leave the scheme.

Solution 2: NS&I — Accessible Before Probate

NS&I has more flexible bereavement rules than banks. The key points:

• NS&I will repay Premium Bonds (and savings accounts) up to £5,000 per product without a grant of probate, on production of the death certificate and a completed claim form.
• For larger NS&I holdings, NS&I participates in the DPS — you can use IHT423 to direct NS&I to pay IHT to HMRC from the account.
• NS&I can also make a direct payment to the executor (rather than to HMRC) for amounts above £5,000 in some circumstances — check NS&I’s current bereavement guidance, which is updated periodically.

If the deceased held substantial NS&I savings, this is often the easiest source of funds for the IHT bill.

Solution 3: Instalment Option for Property

Where the estate is property-heavy and cash-light — a common scenario where the deceased owned a house but had modest savings — the IHT attributable to that property can be paid in 10 equal annual instalments rather than as a lump sum. The instalment option is available for:

• Land and buildings, including the family home
• A business or partnership interest
• Unquoted shares (subject to conditions)
• Quoted shares giving control of the company

The first instalment is due at the normal six-month deadline — so the instalment option does not eliminate the need to find some cash by month six. But it reduces the immediate IHT bill significantly: if total IHT attributable to a property is £100,000, only £10,000 is due at month six (plus interest on the remaining £90,000).

Interest on the outstanding instalments accrues at HMRC’s statutory rate (around 7–8% in 2026), except where Business Property Relief or Agricultural Property Relief applies (interest-free). The full outstanding balance becomes immediately payable if the property is sold before all instalments have been paid.

The instalment election is made on the IHT400 form. This is a valuable option for executors waiting to sell the property before settling the full IHT bill.

Solution 4: Executor Personal Funds

An executor can pay the IHT bill from their own funds and be reimbursed from the estate once probate is granted and the estate’s accounts are accessible. This is straightforward where the IHT bill is manageable and the executor has the personal resources. Key points:

• Keep a clear record of the payment — bank statements and the HMRC payment reference are needed to demonstrate reimbursement from the estate is a legitimate debt.
• The executor is entitled to be repaid as a priority debt of the estate — ahead of beneficiaries but after funeral expenses and other administration costs.
• Do not co-mingle personal funds with estate funds in the executor’s account — maintain a separate estate bank account once probate is granted.

Solution 5: Probate Bridging Loans

If the IHT bill is large, the estate is illiquid, and the executors cannot fund it personally, specialist probate lenders offer bridging loans secured against the estate. The loan is used to pay the IHT bill, enabling probate to proceed, and is then repaid from the estate (typically on sale of the property). Key points:

• Interest rates: typically 0.5–1.5% per month. On a £200,000 IHT bill, that is £1,000–£3,000 per month in interest — significant, but often less than HMRC late payment interest on the same amount.
• Lenders typically require evidence of the estate’s assets (including the property valuation) and confirmation of the IHT amount due.
• Probate bridging is a specialist product — seek quotes from lenders experienced in this area. High-street banks rarely offer it.
• The estate bears the bridging loan costs — these are allowable as administration expenses when calculating the residuary estate for distribution.

The Sequence in Practice: A Timeline

A realistic timeline for a taxable estate in England and Wales (death in April 2025, IHT deadline 31 October 2025):

• Month 1–2 (April–May): Gather valuations — property surveyor, share registrar valuations, bank statements at date of death. Identify all assets and liabilities.
• Month 2–3 (May–June): Complete IHT400 and all schedules. Submit to HMRC. Simultaneously, complete IHT423 forms for each bank/NS&I and submit to the relevant institutions.
• Month 3–5 (June–October): Banks pay HMRC via DPS. HMRC processes the IHT400 (6–10 weeks). HMRC issues IHT421 to HMCTS.
• By end of Month 6 (October): First instalment due if instalment option has been elected for property IHT. IHT on non-instalment assets must be fully paid by this date.
• Month 4–6 (September–November): Probate application submitted to HMCTS with IHT421 reference. Grant of probate issued (HMCTS processing times 3–8 weeks in 2026).
• Month 6+ (October onwards): Grant received — executor can now collect estate assets, sell property, and distribute to beneficiaries.

Frequently Asked Questions