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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
, see all updates

Assessing: deposits: more than one calculation

Where:

  • two or more calculations are made at the same time, and
  • there is interest due on each,

the general rule is that you should apply the deposit against tax first and then against interest charges.

Example

Two calculations are being issued on the free estate

  • one for NIOP (IHTM31012); tax £2,000, and
  • one for IOP; tax £1,000.

Interest is running. The taxpayer placed £3,000 on deposit, but after the due date.

Tax on NIOP £2,000
   
Interest to date of deposit £60
Total payable £2,060
Less deposit £2,000
To be paid £60
Tax on IOP £1,000
   
Interest to date of deposit £30
Total payable £1,030
Less deposit £1,000
To be paid £30

Interest has been restricted on both calculations since the amount of the deposit (£3,000) exactly matches the tax due.

If the deposit only partly covers the tax due

If the taxpayer or agent has not given instructions on how the deposit should be used, apply it in the way which would be most beneficial for them.

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If you are assessing IOP only

  • apply the deposit firstly against ordinary IOP, and then
  • against any IOP (WIR).