When do I have to pay Inheritance Tax?
December 16, 2022
When someone dies, one of the biggest responsibilities of the executors is dealing with the Inheritance Tax. It’s essential this is dealt with within the required time limits to avoid any necessary penalties. Find out more in this conversation from Marsons Solicitors Partners, Beth King and Jennifer White.
If you need to make a will or have an existing will that needs updating, contact Beth King today on 020 8313 1300 or email@example.com.
When do we have to pay Inheritance Tax?
A conversation with Marsons Partners, Beth King and Jennifer White
J: When do we have to pay Inheritance Tax?
B: It’s the executor’s responsibility to pay the Inheritance Tax. The first thing they’ve got to do is work out what is in the estate, what the assets are, and whether any gifts have been made in the seven years leading up to death, as they will affect the amount of Inheritance Tax that you have to pay, and whether you have to pay it at all.
The time limit for submitting the forms to the Inland Revenue is 12 months from the date of the death. or from the end of the month of death, let’s put it that way. So it can be slightly more than 12 months.
B: And if you don’t put it in by then, then you’re going to pay £100 penalty just for not putting the forms in in time. However, if there is tax to pay. then it has to be paid within six months of the end of the month of death and after that interest will start to run. So it’s really important that you get on with it quite quickly and get the forms into the Revenue, really within six months, because otherwise interest’s going to start mounting up.
J: There have been reports in the press about people being concerned about having to pay tax early, do you have any comments on that?
B: You have to pay tax on everything except the deceased’s residence. So if you’ve got a property, then you have to pay the tax on that by the time you sell it. If you sell it, you then pay the tax, but if you keep it, you have to pay over a period of 10 years in 10 annual instalments, so you can spread that.
If there’s no immediately available cash to pay the tax on everything else and the first instalment on any property tax, the banks will pay money out of bank accounts and they pay it direct to the Revenue. There’s just a form that you have to fill in and send to the bank, and they then send the money to HMRC for you. If there is no money, then it may be that a bank loan has to be arranged to pay the tax until you’ve got the Grant of Probate, and then you can go and empty the bank accounts, get the money out and repay the loan, but that’s quite rare in my view.
The information contained in this article is intended for general guidance only. It provides useful information but it is not a substitute for obtaining legal advice as the articles do not take into account specific circumstances. So do please Contact US for legal advice on the issues raised.