Do You Have To Pay Inheritance Tax Before Probate?

Yes, you typically must pay inheritance tax (IHT) before probate is granted in the UK, as HMRC requires payment within six months of death and most financial institutions won’t release the deceased’s funds without probate-creating a challenging cash flow problem for executors who must find ways to settle the tax bill before gaining full access to the estate’s assets.

According to recent HMRC statistics, only 4.39% of UK deaths resulted in an inheritance tax charge in 2021-2022, meaning fewer than 1 in 20 estates actually pay inheritance tax. However, for the 27,800 estates that did incur IHT liability, the average tax bill was a substantial £215,000. Combined with current probate delays (averaging 9.6 weeks from submission to grant), executors face significant financial and administrative hurdles when managing estates that exceed the inheritance tax threshold.

Do You Have to Pay Inheritance Tax Before Probate?

The relationship between inheritance tax and probate creates a challenging situation for many executors. While probate is needed to access most of the deceased’s assets, HMRC typically requires inheritance tax to be paid before they’ll issue the necessary clearance for probate to proceed. This creates a circular problem: you need probate to access funds, but you must pay the tax before getting probate.

This conundrum affects thousands of families each year, particularly those dealing with property-heavy estates where the main asset cannot be easily liquidated before probate. Understanding this relationship is crucial for executors who need to navigate the probate process efficiently while fulfilling their legal obligation to settle any tax liability.

How Is Inheritance Taxed in the UK? The Basics Explained

Inheritance tax is charged at 40% on the portion of an estate that exceeds the tax-free threshold (nil-rate band) of £325,000. For estates that include a residence passed to direct descendants, an additional residence nil-rate band of up to £175,000 may apply.

Several factors affect how and when inheritance tax must be paid:

The relationship between the deceased and beneficiaries
Whether the deceased was married or in a civil partnership
The types of assets in the estate (property, investments, cash)
Any exemptions or reliefs that may apply
Whether any lifetime gifts were made within seven years of death

For married couples, unused nil-rate band allowances can be transferred to the surviving spouse, potentially increasing the tax-free threshold to £650,000, or up to £1 million when including the residence nil-rate band. This explains why IHT often becomes an issue only after the second partner dies.

What Is the Most You Can Inherit Without Paying Taxes?

The inheritance tax threshold depends on several factors, but for most individuals, the standard nil-rate band is £325,000. This means estates valued below this amount don’t incur inheritance tax. However, this threshold can be increased in certain circumstances:

If the deceased leaves their home to direct descendants, the residence nil-rate band adds up to £175,000
For married couples or civil partners, any unused allowance from the first death can be transferred to the surviving spouse
This means a married couple could potentially pass on up to £1 million tax-free (£325,000 x 2 + £175,000 x 2) to their children or grandchildren

The threshold has remained frozen since 2009 and will continue to be frozen until at least 2027-2028, meaning more estates are likely to be pulled into the inheritance tax net as property and asset values rise over time.

How to Pay Inheritance Tax Before Accessing the Estate’s Assets?

Paying inheritance tax before probate presents a practical challenge that executors must overcome. Here are the main methods available:

1. Direct Payment from the Deceased’s Account

Many UK banks and building societies participate in the Direct Payment Scheme, allowing HMRC to receive inheritance tax payments directly from the deceased’s accounts before probate. To arrange this, executors must:

Complete form IHT423
Send it to the bank or building society holding the deceased’s funds
The financial institution will then send payment directly to HMRC

This is often the simplest solution but depends on the deceased having sufficient cash in their accounts.

2. Payment from the Executor’s Personal Funds

Executors can pay the inheritance tax from their own resources and later reclaim the amount from the estate once probate is granted. While this avoids delays, it requires the executor to have substantial personal funds available.

3. Instalment Options for Property Assets

For estates where the tax liability relates to land and buildings (including the deceased’s home), HMRC allows payment in 10 annual instalments. However:

Only the portion of tax attributable to these assets qualifies
Interest is charged on the outstanding amount (currently 7.75% as of May 2025)
The full amount becomes due if the property is sold

4. Executor Loans or Bridging Finance

Specialist lenders offer executor loans specifically designed to cover inheritance tax payments before probate. These short-term loans are typically repaid once the estate assets are accessible.

The following table outlines the key advantages and disadvantages of each payment method:

Payment Method	Advantages	Disadvantages	Best Suited For
Direct Payment Scheme	No need for external funds; straightforward process	Requires sufficient cash in deceased’s accounts	Estates with adequate cash reserves
Executor’s Personal Funds	Fast; avoids delays in probate	Requires substantial personal resources; risk if estate complications arise	Executors with available funds and confidence in the estate
Instalment Payments	Spreads cost over time; no need for immediate large payment	Interest charges apply; full amount due if property sold	Property-rich, cash-poor estates
Executor Loans	No need for personal funds; quick arrangement	Additional cost (interest and fees); adds to estate debt	Time-sensitive cases with valuable assets but limited liquidity

This comparison highlights why the method chosen often depends on the estate’s composition and the executor’s financial situation. Many executors find themselves weighing these options under significant time pressure while also dealing with the emotional aspects of bereavement.

When Must Inheritance Tax Be Paid After a Death?

Inheritance tax must be paid by the end of the sixth month following the month of death. For example, if someone died on 15th January 2025, the inheritance tax would be due by 31st July 2025.

Missing this deadline has consequences:

HMRC charges interest on late payments (currently 7.75% per year as of May 2025)
Potential penalties may apply for significant delays
Probate will be delayed, holding up the entire estate administration process

While the six-month timeframe may seem generous, the combination of property valuations, probate applications, and the challenge of raising funds means executors often find themselves under significant time pressure. Planning ahead and understanding payment options is essential for meeting this deadline without unnecessary stress or costs.

Real-Life Scenario: Freya from Swindon & the Inheritance Tax Dilemma

Freya from Swindon found herself in a challenging situation after her father passed away, leaving his £650,000 home to Margaret and her brother. With no other significant assets in the estate and a £130,000 inheritance tax bill due before probate could be granted, Margaret faced a seemingly impossible situation.

“We were completely stuck,” Freya explains. “Dad’s bank accounts had less than £20,000, but we needed to pay £130,000 to HMRC before we could sell the house. It was a horrible catch-22 situation that caused enormous stress during an already difficult time.”

After exploring several options, Freya contacted Property Saviour for advice. “They explained that we could arrange a guaranteed sale of the property that would complete as soon as probate was granted. This allowed us to approach a specialist lender who provided a short-term executor loan, knowing we had a definite buyer lined up.”

Property Saviour’s guaranteed purchase gave Margaret and her brother the certainty they needed to secure the loan, pay the inheritance tax, and obtain probate without the stress of marketing the property or worrying about whether it would sell. If you’re facing a similar situation with an inherited property and inheritance tax obligations, our team understands these challenges and can offer practical solutions with compassion and expertise.

Does Joint Tenancy Avoid Inheritance Tax? Common Misconceptions

Many people believe that owning property as joint tenants automatically protects it from inheritance tax, but this is only partially true. When unmarried joint tenants inheritance tax rules apply, the deceased’s share of the property forms part of their estate for inheritance tax purposes.

While joint tenancy does allow the deceased’s share to pass automatically to the surviving owner(s) without going through probate (known as the “right of survivorship”), it doesn’t exempt this share from inheritance tax calculations if the total estate exceeds the nil-rate band threshold.

For married couples or civil partners, different rules apply:

Transfers between spouses/civil partners are exempt from inheritance tax
This means the surviving spouse inherits the deceased’s share tax-free
However, the tax may still be due when the second partner dies

It’s important to distinguish between probate avoidance (which joint tenancy does provide) and tax avoidance (which it generally doesn’t, except between spouses). Many families discover this distinction too late when planning their estates.

CGT on Jointly Owned Property on Death: What Happens Next?

When someone who jointly owns a property dies, Capital Gains Tax (CGT) considerations come into play alongside inheritance tax. It’s important to understand that:

There’s no CGT to pay on death-assets are inherited at their market value at the date of death
This creates a new “base cost” for calculating any future capital gain
If the surviving owner later sells the property, CGT may be due on any increase in value since the date of death
For married couples and civil partners, the tax-free spousal transfer rules mean no CGT is triggered

This “uplift” in base cost can be beneficial for tax planning, as it effectively wipes out any gain that occurred during the deceased’s ownership. However, it doesn’t affect the inheritance tax position, which treats the deceased’s share as part of their taxable estate.

What Happens If You Cannot Pay Inheritance Tax Before Probate?

If you’re unable to pay inheritance tax before probate, several options are available:

Contact HMRC immediately to explain your situation
Apply for the instalment option for tax
Request a “grant on credit” from HMRC by providing evidence of your efforts to arrange payment
Consider selling assets that don’t require probate to access (such as joint accounts or assets in trust)
Explore executor loans or bridging finance
Sell the property for cash to us.

The worst approach is to ignore the situation, as this will result in mounting interest charges and potential penalties. HMRC can be reasonable when executors demonstrate they’re taking proactive steps to address the tax liability.

Based on experiences, many executors find themselves in this position and feel overwhelmed by the circular nature of the problem. At Property Saviour, we’ve noticed that having a guaranteed cash property buyer can often break this cycle by providing certainty for lenders and executors alike.

Seven Critical Steps for Executors Dealing with Inheritance Tax Before Probate

If you’re an executor facing inheritance tax payments before probate, follow these essential steps:

Estimate the inheritance tax due as soon as possible after death
Identify which assets can be accessed without probate (joint accounts, NS&I products, some insurance policies)
Contact the deceased’s banks to establish their requirements for the Direct Payment Scheme
Submit the appropriate inheritance tax forms to HMRC (IHT400 or IHT205)
Arrange payment through one of the methods discussed earlier
Apply for probate once HMRC acknowledges tax payment
Reclaim any executor funds used to pay the tax once estate assets are accessible

Taking these steps promptly can help avoid unnecessary interest charges and ensure the probate process proceeds as smoothly as possible. Many executors find that professional assistance with some or all of these steps provides valuable peace of mind during a difficult time.

Selling an Inherited House to Pay Inheritance Tax: Practical Considerations

When an estate consists primarily of property, selling the inherited house may be necessary to settle inheritance tax liabilities. However, this creates a timing challenge since the property typically can’t be sold until after probate is granted.

For executors in this position, several approaches can help:

Begin marketing the property before probate to identify potential buyers
Consider companies that specialize in probate property purchases
Arrange interim financing to cover the tax bill until the property sells
Explore the 10-year instalment option for property-related inheritance tax

At Property Saviour, we understand these challenges and offer a we buy any property service that can provide certainty during this uncertain time. Our guaranteed purchase approach means executors know exactly when and for how much the property will sell, we can also give you an interest free cash advance.

Unlike traditional estate agents, who cannot guarantee when or if a property will sell, our service provides the certainty many executors need when dealing with inheritance tax obligations. This approach has helped numerous clients navigate the challenging period between death and probate completion.

The Impact of Probate Delays on Inheritance Tax Planning

Recent data shows that probate applications now take an average of 9.6 weeks from submission to grant, with some complex cases taking significantly longer. These delays can create additional challenges for inheritance tax planning:

Interest on unpaid inheritance tax continues to accrue during probate delays
Executor loans may need to be extended, increasing costs
Property values may fluctuate during extended waiting periods
Beneficiaries face longer waits to receive their inheritance

These delays highlight the importance of starting the probate and inheritance tax process as quickly as possible after death. Executors should consider submitting probate applications concurrently with making inheritance tax arrangements to minimise overall timeline extensions.

Based on our insights from dealing with executor, those who begin gathering necessary documents and obtaining valuations immediately after death typically experience smoother processes than those who delay.

We’ve identified several recurring themes from executors who have navigated the inheritance tax and probate process:

Many executors underestimate how long probate will take, especially when inheritance tax is involved
The emotional burden of financial responsibility during bereavement is often overlooked
Executor loans, while helpful, can add significant stress if property sales are delayed
Early professional advice, though seemingly expensive, often saves money in the long run
Family tensions frequently arise when inheritance tax diminishes the expected inheritance

At Property Saviour, we’ve found that providing executors with a guaranteed property purchase removes one of the most significant uncertainties in this process, allowing them to focus on other administrative matters with greater confidence.

When Inheritance Tax Meets Bereavement: A Compassionate Approach

Being thrust into the role of executor while grieving is already overwhelming-add inheritance tax obligations and probate delays, and it can feel utterly impossible to cope. At Property Saviour, we’ve sat with hundreds of executors across their kitchen tables, listening to their stories of frustration, worry and emotional exhaustion.

The Hidden Costs of Traditional Property Sale During Probate

While estate agents promise to “get the best price,” the reality for many executors is starkly different:

Months of uncertainty with no guaranteed sale
Property sitting empty and vulnerable while accruing council tax and insurance costs
Expensive executor loans with interest charges mounting daily (often 15-20% APR)
The emotional strain of managing viewings and negotiations during bereavement
Pressure from beneficiaries wondering why the process is taking so long

One executor from Sheffield told us: “By the time the estate agent finally found a buyer-after three previous sales fell through-the interest on my executor loan had already eaten up £48,000. That’s money that should have gone to my mother’s grandchildren.”

The Property Saviour Difference: Certainty When You Need It Most

We understand that what executors need most isn’t just a property buyer-it’s financial certainty during an emotionally turbulent time:

Guaranteed sale with fixed timeline you can depend on, typically completing within 10-14 days of probate
Interest-free cash advance to cover inheritance tax payments, deducted only upon completion
No viewings, no chains, no strangers walking through cherished family spaces
Contribution towards legal fees to further reduce the financial burden
Compassionate, human support from a team who understands the emotional complexities of probate

When facing HMRC deadlines while trying to honour a loved one’s legacy, you shouldn’t have to bear this burden alone. Our team works alongside executors with genuine care and understanding, recognising that this isn’t just a property transaction-it’s a significant life transition requiring sensitivity and respect.

If you’re feeling overwhelmed by the seemingly impossible task of paying inheritance tax before accessing estate funds, call us for a confidential, no-pressure conversation about how we might help. We promise clear, straightforward advice that puts your wellbeing first during this challenging time.

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