Inheritance Tax Paid by Instalments: The Data

Inheritance Tax on certain assets that can take time to sell, such as a house, land, or a share in a business, may be paid in 10 equal annual instalments rather than in a single payment (gov.uk, as at July 2026, subject to change). This is a data-led guide to how the instalment option works and how much Inheritance Tax the UK now raises. Figures are current as at July 2026 and are subject to change.

Inheritance Tax is a UK-wide tax, so the instalment rules described here apply across England, Wales, Scotland and Northern Ireland, although the surrounding probate process differs (Scotland uses confirmation rather than a grant of probate). The standard Inheritance Tax rate is 40%, charged only on the part of an estate above the available tax-free thresholds (gov.uk/inheritance-tax, as at July 2026, subject to change).

How the instalment option works

Inheritance Tax on qualifying assets can be paid in 10 equal annual instalments, with the first instalment due at the end of the sixth month after the person died, and each further payment due on that date every year (gov.uk, as at July 2026, subject to change). The option is not automatic: an executor elects for it on the Inheritance Tax account form IHT400.

The instalment route exists because much of an estate's value can be tied up in things that are hard to turn into cash quickly. Where net estate value is below £1 million, estates are likely to consist mainly of residential property and cash, and above that level they increasingly hold securities and other assets (HMRC Inheritance Tax liabilities statistics, tax year 2022 to 2023). Selling a home or a business interest can take many months, so spreading the tax can help an executor avoid a forced sale.

The instalment option applies to Inheritance Tax on assets that take time to sell, paid over 10 years, but the tax becomes payable in full once the asset is sold. Source: gov.uk, as at July 2026, subject to change.

When the balance falls due

If the asset that the instalments relate to is sold, the outstanding tax must be paid in full at that point rather than continuing over the remaining years (gov.uk, as at July 2026, subject to change). In practice this means the instalment option tends to suit executors who intend to keep an asset, such as a family home a beneficiary will live in, rather than those planning an early sale.

Key figures at a glance

Inheritance Tax liabilities created in respect of the 2022 to 2023 tax year reached £6.70 billion across 31,500 taxpaying estates, an increase of 3,700 estates, or 13%, on the previous year (HMRC Inheritance Tax liabilities statistics, tax year 2022 to 2023). The table below sets out the headline numbers behind the instalment option, each with its source and reference period.

All figures subject to change. Statistics reflect the most recent published reference periods as at July 2026.

Which assets qualify for instalments

The instalment option is limited to categories of asset that HMRC accepts can take time to sell. Broadly these are unsold houses, land and buildings, certain shares, and the net value of a business or an interest in a business (gov.uk, as at July 2026, subject to change). The table sets out the main categories and the conditions attached to each.

Source: gov.uk, pay your Inheritance Tax bill in yearly instalments, as at July 2026, subject to change.

Because the £20,000 and 10% share tests, the control test and the Business Relief position all turn on the facts of a particular estate, many people choose to check eligibility with a qualified professional before electing for instalments.

What the numbers mean

Inheritance Tax receipts have grown from £3.5 billion in 2006 to 2007 to £8.5 billion in 2025 to 2026, while the tax-free thresholds have been held at their 2020 to 2021 levels and are set to stay frozen to the end of the 2030-31 tax year (5 April 2031) (HMRC tax receipts bulletin, 2025 to 2026, subject to change; gov.uk, as at July 2026, subject to change). In our view, that combination helps explain why more estates are being drawn in and why funding the bill is becoming a more common question.

A second point stands out from the data. HMRC notes that, in estates below £1 million, the value is likely to sit mainly in residential property and cash (HMRC Inheritance Tax liabilities statistics, tax year 2022 to 2023). Property cannot be sold as quickly as a bank balance, so for many families the tax due can exceed the cash readily available. This is the gap the instalment option is designed to bridge, which may be why it can be relevant even for estates that are not especially large.

The trade-off is cost. Because later instalments generally carry interest at HMRC's rate, currently 7.75% (HMRC, as at July 2026, subject to change), spreading the tax can add materially to the total paid over a decade, except for Agricultural or Business Relief assets that may be interest-free from 6 April 2026. Whether the instalment route is worthwhile depends on the assets, the interest position and the family's plans, so it can be worth discussing with a qualified professional.

Sources and methodology

Every statistic in this article comes from a named official source and reflects the most recent published reference period as at July 2026. Figures are reported as stated by the source, without rounding or estimation beyond what the source itself provides.

• Receipts. UK Inheritance Tax receipts of £8.5 billion (2025 to 2026) and £3.5 billion (2006 to 2007) are from the HMRC tax receipts and National Insurance contributions annual bulletin.
• Estates and liabilities. The 31,500 taxpaying estates, the 13% year-on-year rise, the £6.70 billion of liabilities and the 13% average effective rate are from the HMRC Inheritance Tax liabilities statistics commentary, tax year 2022 to 2023.
• Instalment rules. The 10-year instalment schedule, qualifying assets, the sale rule and the Agricultural/Business Relief interest exception are from gov.uk, paying your Inheritance Tax bill in yearly instalments.
• Interest rate. The 7.75% late-payment rate from 9 January 2026 (base rate plus 4%) is from HMRC interest rates for late and early payments.
• Core Inheritance Tax framework. The 40% standard rate and threshold freeze to 2030-31 are from gov.uk/inheritance-tax.

For context on how the tax itself is calculated, see our Inheritance Tax Explained guide, the practical steps in how to pay inheritance tax, and the wider estate planning guide.

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