Paying Inheritance Tax Before Probate: Funding, Instalments, Deadline

Paying inheritance tax before probate is the puzzle almost every UK executor runs into: the Probate Registry will not issue the grant until HMRC confirms the tax has been dealt with, yet the estate’s bank accounts and property stay frozen until the grant arrives. The way out is to use payment routes that do not need probate. The most common is the Direct Payment Scheme, which lets the deceased’s banks and building societies send money straight to HMRC. Executors also draw on NS&I holdings, their own savings, or short-term executor loans, then reclaim the money once the estate is unlocked. Tax is charged at 40% on the value of the estate above the £325,000 nil-rate band.¹

Why the Tax Has to Be Paid First

The Probate Registry will not process your application until it receives form IHT421 from HMRC. This form confirms inheritance tax has been settled or arranged, and HMRC sends it directly to the court rather than to you. It takes roughly 21 days to arrive after HMRC receives your completed IHT400 and payment.² If your probate application arrives at the court before the IHT421 does, it simply waits.

That is the lockout. The estate’s main assets cannot be sold or drawn on until probate is granted, but probate will not be granted until the tax bill is dealt with. The whole practical challenge is finding money from somewhere that does not need the grant.

When You Do Not Have to Pay Before Probate

Some estates avoid this problem entirely. An “excepted” estate owes no inheritance tax, so HMRC does not need to send the IHT421 confirmation and probate moves faster. An estate is usually excepted if:³

The total value is under the £325,000 nil-rate band.
It is worth £650,000 or less and you are claiming an unused nil-rate band from a spouse or civil partner who died first.
It is worth under £3 million and passes entirely to a surviving spouse, civil partner, or qualifying charity.
The deceased lived permanently outside the UK and held UK assets worth £150,000 or less.

If your estate falls into one of these categories, most of what follows does not apply to you. The rest of the article deals with estates that owe tax.

How Much Is Owed

Inheritance tax is 40% on everything above the £325,000 nil-rate band. This threshold has been frozen since 2009 and stays at £325,000 until at least April 2030.¹ An estate worth £500,000 with no other reliefs would owe 40% of £175,000, which is £70,000.

Two additions can lift the threshold. The residence nil-rate band adds up to £175,000 when the deceased’s home passes to direct descendants such as children or grandchildren, taking the effective allowance for a single person to £500,000. It tapers away for estates above £2 million.⁴

Any unused nil-rate band from a spouse or civil partner who died earlier can also transfer across, potentially doubling the tax-free allowance to £650,000, or up to £1 million once the residence nil-rate band transfers too. The claim must reach HMRC within two years of the surviving spouse’s death.⁵

Get a Reference Number Early

Before you can pay anything, you need an inheritance tax reference number from HMRC. Apply for it at least three weeks before you intend to make a payment, either online at GOV.UK or by posting Schedule IHT422.⁶ Without it, HMRC cannot match your payment to the estate, and payments that sit unallocated can hold up the whole probate application.

The IHT400 and Valuations

The IHT400 is the main return. It captures all assets, debts, gifts made in the seven years before death, and any reliefs claimed, with supplementary schedules for different asset types.⁷ Property usually needs a professional appraisal, and investments must be valued at the date of death. HMRC challenges low valuations, so accuracy matters. Debts, mortgages, credit card balances, and funeral costs come off the gross figure to give the net taxable value.

How to Fund the Payment Before Probate

Most executors combine more than one of the routes below to pull together the bill.

The Direct Payment Scheme

This is the workhorse. Banks, building societies, and investment providers can transfer funds directly from the deceased’s accounts to HMRC without waiting for probate. Complete form IHT423 for each institution holding the deceased’s money and send it alongside the IHT400.⁸ The institution pays HMRC directly, so the money never passes through your hands. That is what lets the scheme work before the grant is issued.

National Savings and Government Stock

NS&I accounts and government stock held by the deceased are also accepted as pre-grant payment sources. HMRC lists them alongside the Direct Payment Scheme.⁹ The mechanics work the same way, with the money moving straight to HMRC.

Paying From Your Own Funds

Some executors cover the bill from personal savings and reimburse themselves once the estate’s accounts open after probate. This is often faster than waiting on a bank to process an IHT423, but it needs enough personal liquidity to absorb the full amount. Keep clear records so you can reclaim the payment cleanly during estate administration.

Executor Loans

When the estate is asset-rich but cash-poor, typically because most of the value sits in property, specialist executor loans or bridging finance can cover the tax. These are short-term products, repaid once the property sells or the estate’s accounts open. Interest rates run higher than standard lending, so they suit situations where a sale is expected quickly.

Paying in Annual Instalments

Some assets take time to sell, so HMRC lets you spread the tax attributable to them over 10 equal annual payments instead of settling it all at once. The qualifying categories are:¹⁰

Houses and land, at 10% of the tax attributable each year plus interest.
Controlling shareholdings, meaning shares or securities that gave the deceased control of more than 50% of a company.
Unlisted shares worth more than £20,000 that represent at least 10% of the company’s nominal or ordinary share value.
The net value of a business run for profit, but not its individual assets.
Agricultural land and property, though most of it qualifies for a separate relief that removes the tax entirely.

Instalments help when beneficiaries want to keep a family home rather than sell it to raise the tax. You still owe the first instalment before probate. Interest accrues on the outstanding balance, so the total cost ends up higher than paying in full.

Sending Payment to HMRC

Once you have the funds and your reference number, HMRC accepts payment by online bank transfer, telephone banking, in person at a bank or building society, and by cheque in the post. CHAPS and BACS transfers are the fastest.⁹ Whatever route you pick, include the inheritance tax reference number so HMRC can match the payment to your IHT400.

When the payment clears, HMRC generates the IHT421 and sends it directly to the Probate Registry, and you get a letter or online notification confirming it has done so.¹¹ That is the point at which the court can move on your probate application.

The Six-Month Deadline and Interest

Inheritance tax must be paid by the end of the sixth month after the month of death. Someone who dies in January has a deadline of 31 July.⁹ After that, HMRC charges late payment interest automatically. The rate as of January 2026 is 7.75%, which builds up quickly on a large bill.¹

If final valuations are still not in, particularly for property, you can pay a provisional amount based on your best estimate. That stops interest running on whatever you have paid. If the final figure turns out lower, HMRC refunds the difference. If it turns out higher, interest applies only to the shortfall from the original deadline. At 7.75%, an early estimated payment almost always beats waiting for perfect figures.

1
GOV.UK. Inheritance Tax Thresholds and Interest Rates
2
Inside HMCTS. Working Together to Avoid Delays to Probate Applications
3
GOV.UK. How to Value an Estate for Inheritance Tax and Report Its Value – Check Type of Estate
4
GOV.UK. Inheritance Tax Nil-Rate Band and Residence Nil-Rate Band Thresholds From 6 April 2026 to 5 April 2028
5
GOV.UK. Transferring Unused Basic Threshold for Inheritance Tax
6
GOV.UK. How to Value an Estate for Inheritance Tax and Report Its Value – Paying Inheritance Tax
7
HM Revenue & Customs. IHT400 – Inheritance Tax Account
8
GOV.UK. Direct Payment Schemes for Inheritance Tax (IHT423)
9
GOV.UK. Pay Your Inheritance Tax Bill – Overview
10
GOV.UK. Pay Your Inheritance Tax Bill – In Yearly Instalments
11
Practical Law. COVID-19 – HMRC Updates Inheritance Tax Probate Summary Form IHT421 and Process for Submitting Form