How to Pay Inheritance Tax

Who pays inheritance tax?

In most cases the estate pays, not the people inheriting. The executor named in the will, or the administrator where there is no will, is responsible for reporting the estate and paying any inheritance tax due from the estate's assets before the remainder is distributed (gov.uk, as at July 2026, subject to change). Beneficiaries generally receive their share after tax has been settled, so a gift left in a will usually reaches them free of the inheritance tax on the estate.

When does inheritance tax have to be paid?

Inheritance tax must be paid by the end of the sixth month after the month in which the person died. If someone died in January, for example, the tax would be due by the end of July. HMRC charges interest on any tax paid after the due date, so late payment adds to the cost (gov.uk, paying inheritance tax, as at July 2026, subject to change). In practice the estate often needs to make at least some payment before probate is granted, which is what the Direct Payment Scheme and instalment options are designed to help with.

Getting a payment reference number

You cannot pay inheritance tax without a payment reference number, and it takes time to arrive. HMRC asks you to apply for the reference number at least 3 weeks before you plan to make a payment, so it is worth requesting it early in the administration rather than close to the deadline (gov.uk, get a payment reference number, as at July 2026, subject to change).

The reference number ties your payment to the estate's records. Once you have it, you can pay by bank transfer, from the deceased's account under the Direct Payment Scheme, or by other accepted methods, and you can begin the process before probate is granted (gov.uk, as at July 2026, subject to change).

Ways to pay inheritance tax

There is no single method, and the right route often depends on where the money is. The estate may pay by online or telephone bank transfer, from the deceased's own bank or building society account under the Direct Payment Scheme, from money held in National Savings or government stock, or by selling assets once probate allows it (gov.uk, paying inheritance tax, as at July 2026, subject to change). Tax on some assets, such as a house, can also be spread over years by instalments.

Way to pay	In brief
Bank transfer	Pay HMRC by online or telephone banking, CHAPS or Bacs, using your payment reference.
From the deceased's account	The Direct Payment Scheme lets a bank or building society pay HMRC directly, before probate.
By instalments	Tax on certain assets, such as property, may be paid in yearly instalments over 10 years.
From your own funds	An executor may pay and reclaim from the estate once assets are released.

Way to pay

In brief

Bank transfer

Pay HMRC by online or telephone banking, CHAPS or Bacs, using your payment reference.

From the deceased's account

The Direct Payment Scheme lets a bank or building society pay HMRC directly, before probate.

By instalments

Tax on certain assets, such as property, may be paid in yearly instalments over 10 years.

From your own funds

An executor may pay and reclaim from the estate once assets are released.

Paying from the deceased's bank account

Where the tax is due before other funds are available, the estate can often pay it from the deceased's own accounts. Under the Direct Payment Scheme you can start the process before probate: you get a payment reference number, complete form IHT423, and send a separate form to each bank, building society or investment provider you want to pay HMRC from, and the provider then pays HMRC directly (gov.uk, paying from the deceased's account, as at July 2026, subject to change). Not every provider takes part, so it is worth checking with each one.

Get the estate's inheritance tax payment reference number from HMRC.

Ask each bank or building society to note you as personal representative.

Complete a separate form IHT423 for each account you want to draw on.

Send each form to the relevant provider, which then pays HMRC directly. Source: gov.uk, as at July 2026, subject to change.

Where valuing and probate fit in

Paying the right amount depends on first working out what the estate is worth, because the tax is charged on the net value of everything the person owned, less debts. Many executors start by valuing an estate, then report it to HMRC, and often need the grant of probate before banks release funds or a property can be sold. The Direct Payment Scheme exists partly because tax can fall due during that gap, before probate has been granted. For the wider context, see our estate planning guide.

The tax is due within months of death, but the money to pay it is often locked up until probate. Planning ahead is what closes that gap.

Paying inheritance tax in Scotland and Northern Ireland

Inheritance tax is a UK-wide tax, so the deadline, the payment reference, the Direct Payment Scheme and the instalment option apply across Scotland, England, Wales and Northern Ireland alike (gov.uk, as at July 2026, subject to change). What differs is the surrounding process. Scotland uses confirmation rather than a grant of probate to give executors authority over the estate, and its succession rules differ, though the tax itself is the same. Where an estate touches more than one UK nation, it can be worth taking advice in each.

Frequently asked questions

When does inheritance tax need to be paid?

Inheritance tax must generally be paid by the end of the sixth month after the month the person died, and HMRC charges interest on anything paid after that date (gov.uk, as at July 2026, subject to change). Because the deadline can fall before probate is granted, the estate often needs to use the Direct Payment Scheme or instalments to pay at least part of the bill on time.

Do I have to pay inheritance tax before I get probate?

Often, yes, at least in part. Probate is usually needed before banks release funds, yet the tax can fall due beforehand, so the estate may have to pay some tax before the grant is issued. You can start the Direct Payment Scheme before probate, which lets the deceased's bank or building society pay HMRC directly (gov.uk, as at July 2026, subject to change).

How do I get an inheritance tax payment reference number?

You apply to HMRC for the reference number, and it is worth doing so early because HMRC asks for it to be requested at least 3 weeks before you make a payment (gov.uk, as at July 2026, subject to change). Without the reference, a payment cannot be matched to the estate, so many people apply for it near the start of dealing with the estate.

Can I pay inheritance tax in instalments?

For some assets, yes. Tax on land and buildings, a controlling shareholding, certain unlisted shares and some businesses can be paid in equal annual instalments over 10 years, though interest is usually charged (gov.uk, as at July 2026, subject to change). If the asset, such as a house, is later sold, the outstanding tax generally becomes payable in full at that point.

Who is responsible for paying inheritance tax?

The estate is, through its executor or administrator, rather than the individual beneficiaries. The personal representative reports the estate and pays any inheritance tax due from the estate's assets before distributing what remains (gov.uk, as at July 2026, subject to change). Gifts made in the seven years before death can have their own rules (gov.uk, as at July 2026, subject to change), so it can be worth taking advice where lifetime gifts are involved.

What happens if inheritance tax is paid late?

HMRC charges interest on inheritance tax that is not paid by the due date, which is the end of the sixth month after death (gov.uk, as at July 2026, subject to change). Interest can build up while the estate waits for funds to be released, which is one reason many executors use the Direct Payment Scheme or pay part of the bill from their own funds and reclaim it later.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.