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HMRC internal manual

Inheritance Tax Manual

Grants on credit: cases of genuine hardship

It is not unusual for the only asset or significant asset in an estate to be the deceased’s house. Usually the house is sold to pay the tax due. Occasionally, a Personal Representative (PR) or beneficiary will be living in the property.

Forcing the PR to sell the property in which they live to discharge an Inheritance Tax liability may cause genuine hardship and leave them without the means to provide suitable accommodation for themselves and their family in the future.

If this appears to be the situation, you should refer the case to Debt Management who will make the decision whether to postpone payment in these circumstances and monitor the file for payment.

The outstanding tax and interest is usually paid when the person in occupation of the property dies. But the debt can also be discharged if the PR no longer wishes to reside in the property (which will allow a sale) or their financial situation improves.