When Is Inheritance Tax Due? Key Deadlines and What Families Must Do to Stay Compliant

Belgravia Capital
May 31
4 min read

Inheritance tax (IHT) planning is essential, but even the best-laid plans can fall apart if the tax isn’t paid on time.

With the estate of a loved one to manage, it’s easy to lose track of critical deadlines and legal obligations, especially when emotions are running high.

That’s why one of the most important questions we hear is:

“When is inheritance tax due?”

At Belgravia Capital Wealth Management, we help families not only reduce their tax exposure but also stay compliant with HMRC’s strict payment rules.

In this guide, we explain exactly when inheritance tax must be paid, how to pay it, and what happens if you miss the deadline.

Who Is Responsible for Paying Inheritance Tax?

Inheritance tax is paid by the estate, not by the beneficiaries (in most cases). The person responsible is the executor (if there is a will) or administrator (if there is no will).

They must:

Value the estate
Report it to HMRC
Pay any IHT due before the estate is distributed

This is why executors carry significant legal and financial responsibility - and why getting advice early is crucial.

When Is Inheritance Tax Due in the UK?

The short answer:

Inheritance tax is due by the end of the sixth month after the person’s death.

This is known as the IHT payment deadline.

Let’s say someone passes away on 3 January 2025. The inheritance tax must be paid by 31 July 2025.

If the tax is not paid by this deadline:

Interest begins to accrue on the outstanding amount
You may also face penalties for late payment

What If the Estate Can’t Be Fully Valued by the Deadline?

HMRC expects the IHT to be paid on time, even if the probate application or full estate valuation is not yet complete.

Executors can:

Make a payment on account based on estimated figures
Top it up later when the final valuation is confirmed

Paying early, even if it’s only a partial payment, avoids unnecessary interest.

Can You Pay Inheritance Tax in Instalments?

Yes, but only in specific situations.

You can pay inheritance tax in ten equal annual instalments on:

Property (e.g. a home)
Certain business assets
Shares in unlisted companies

The first instalment is due by the six-month deadline, and interest is charged on the unpaid balance - except in some cases involving a main residence.

However, cash, investments, and other assets must be paid in full at the deadline, no instalments allowed.

How Do You Pay Inheritance Tax?

Inheritance tax is paid using a reference number from HMRC and can be paid by:

Bank transfer (BACS or CHAPS)
Cheque
Direct from the deceased’s bank account (banks may release funds specifically for IHT)

Payment must be made to HMRC’s Inheritance Tax Office and should be done well ahead of the deadline to avoid interest.

Which Forms Need to Be Submitted?

In most estates, the executor will need to complete:

Form IHT400 - Full inheritance tax account (for estates over the threshold)
Form IHT421 - For applying for a grant of probate

In simpler cases (e.g. estates below the threshold), Form IHT205 may be used.

What Happens If You Miss the IHT Deadline?

If the tax isn’t paid on time:

Interest is charged from the due date until payment is made
Late payment penalties may be applied by HMRC
Probate may be delayed, as you typically can’t get the grant of probate without settling or arranging IHT

This can cause significant stress and hardship for beneficiaries, especially if property sales or business succession depend on timely distribution.

What If the Estate Includes Illiquid Assets Like Property or a Business?

This is where IHT becomes tricky.

You may be asset-rich but cash-poor, meaning you can’t pay the bill without selling part of the estate. Options include:

Instalment payments (as above)
Bridging loans
Whole-of-life insurance held in trust to cover the tax bill
Selling other estate assets quickly (e.g. shares or investments)

Failing to plan for liquidity can force the sale of family homes or businesses at short notice, often below market value.

Real-World Example: Paying IHT on Time

When Mr. Clarke passed away in February 2024, his estate included:

A main home valued at £950,000
Savings and investments worth £250,000
Total estate: £1.2 million

His wife had predeceased him, and the estate passed to two children.

Using the full combined threshold of £1 million, only £200,000 of the estate was taxable.

IHT owed: £200,000 x 40% = £80,000

The executor paid £80,000 from Mr. Clarke’s savings by 31 August 2024, six months after the date of death, avoiding any interest or penalties.

Had the funds not been available, the executor could have used a life insurance policy in trust or arranged a short-term loan.

5 Tips to Avoid Late Inheritance Tax Payment

Start the estate valuation process immediately after death
Apply to HMRC for an IHT reference number early - it takes time to receive
Pay estimated tax on account if full figures aren’t ready
Use instalments where eligible - especially on property
Set up life insurance in trust before death to cover the bill

How Belgravia Capital Wealth Management Can Help with IHT Planning and Mitigation

We help families:

Estimate and forecast their future IHT liability
Structure assets to ensure the estate has liquidity when needed
Set up insurance policies in trust to cover tax bills
Navigate executor duties and deadlines
Coordinate with solicitors, accountants, and beneficiaries to settle estates efficiently

Planning ahead ensures that inheritance tax doesn’t delay the probate process or create avoidable financial pressure.

Conclusion: When Is Inheritance Tax Due?

Inheritance tax is due six months after death - and delaying payment leads to interest, penalties, and stress.

Even if the full estate isn’t valued yet, a payment on account protects you from financial and legal complications.

With the right planning, most families can ensure that inheritance tax is paid on time - and in many cases, reduced or avoided altogether.