1. Overview

Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than £325,000 when they die. This is called the ‘Inheritance Tax threshold’.

There are different thresholds for previous years.

Inheritance Tax rates

The rate of Inheritance Tax is 40% on anything above the threshold. The rate may be reduced to 36% if 10% or more of the estate is left to charity.

Who pays Inheritance Tax

Usually the ‘executor’ of the will or the ‘administrator’ of the estate pays Inheritance Tax using funds from the estate.

An executor is a person named in the will to deal with the estate - there can be more than one. An administrator is the person who deals with the estate if there’s no will.

Trustees are responsible for paying Inheritance Tax on trusts.

If you’ve received an inheritance, you usually don’t pay Inheritance Tax. There are some exceptions. You may still have to pay other taxes.

You may have to pay Inheritance Tax if someone who died gave you a gift while they were alive.

Work out if Inheritance Tax is due on an estate

Work out how much the estate is worth to find out if the estate needs to pay Inheritance Tax.

If no Inheritance Tax is due on the estate, fill in form IHT205 (in Scotland, form C5) to tell HM Revenue and Customs (HMRC).

If Inheritance Tax is due on the estate, fill in form IHT400. You may need to send other forms at the same time.

You or your solicitor will need to send the forms with your application for probate (‘grant of representation’). This is called ‘confirmation’ in Scotland.

The grant of representation (confirmation) gives you the right to deal with the estate as the executor or administrator.

Deadline for paying Inheritance Tax

The executor of a will or administrator of an estate usually has to pay Inheritance Tax by the end of the sixth month after the person died.

After this the estate has to pay interest.

You can make early payments before you know what the estate owes. Interest isn’t due on this amount.

You can pay Inheritance Tax in instalments over 10 years on things that may take time to sell, eg property and some types of shares.

There are different deadlines for paying Inheritance Tax on a trust.