Inheritance tax on a death estate is due six months after the end of the month in which the person died, so a death in January means payment by 31 July. Interest runs from the day after that date on anything unpaid, even if probate or valuations are still outstanding. Tax on gifts that become taxable because of the death has the same due date, while tax on lifetime gifts into trust has its own timetable.

What is the deadline for tax on the estate?

Section 226(1) of the Inheritance Tax Act 1984 makes tax on a chargeable transfer due six months after the end of the month in which it is made. On death, GOV.UK puts it as the end of the sixth month after the person died: a death at any point in January gives a due date of 31 July. HMRC’s interest helpsheet confirms that for a death in March, interest starts on 1 October.

There is a second rule that often bites first. Section 226(2) requires personal representatives to pay all the tax for which they are liable when they deliver the IHT400, limited to instalments then due where the instalment option is used (IHTM30151). In England and Wales the grant cannot be applied for until HMRC confirms enough tax has been paid, so most executors pay before the six month date anyway. The IHT400 itself can be sent up to 12 months after the death, but the payment deadline does not move with it. HMRC’s manual (IHTM30157) says there is no discount for paying before the due date. Ways of raising the money are covered in paying inheritance tax before probate.

How is interest on late payment worked out?

Section 233 charges interest on tax that remains unpaid after the due date, at the rate set under section 178 of the Finance Act 1989. HMRC’s manual (IHTM30361) says interest generally runs from the day after the due date to the date of payment. The rate is linked to the Bank of England base rate:

  • from 29 September 2009 to 5 April 2025, base rate plus 2.5%;
  • from 6 April 2025, base rate plus 4%.

At the time of writing, GOV.UK shows the inheritance tax late payment rate as 7.75% from 9 January 2026. The rate changes whenever base rate changes, so a long period of late payment may need splitting across several rates.

HMRC’s IHT400 helpsheet shows the method. Count the days from the date interest starts to the payment date, including both days, then multiply the tax by the rate and the number of days and divide by 366. It is simple interest, not compounded. Under section 233(3) the interest is not deductible for any other tax. The same rate applies across HMRC’s main taxes; see HMRC late payment interest.

Does interest stop while probate or valuations are pending?

No. Interest is charged on tax that turns out to be due, from the original due date, regardless of why it was paid late. A house valuation increased by the Valuation Office a year later produces extra tax with interest running from the six month date. Executors have three ways to limit the cost:

  • Payments on account. GOV.UK says payments can be made before the exact amount of tax is known.
  • Prompt corrections. When a value changes, GOV.UK says to calculate any additional tax and make a payment on account to stop interest building up, then send a corrective account.
  • Planning the reference. An inheritance tax payment reference must be obtained from HMRC at least three weeks before paying, so it should be requested early.

Payments made at a bank branch are treated as made on the day they are paid in, if paid between Monday and Friday.

How do instalments change the position?

Tax on certain assets, such as a house, qualifying shares and business interests, can be paid in ten annual instalments if the executors elect in writing (IHTM30202). Only the first instalment is due on the normal six month date (IHTM30140). The helpsheet explains that, for ordinary instalments, each later payment carries interest on the whole unpaid balance for the year as well as on the instalment itself if paid late. Some categories, such as business interests and property qualifying for agricultural relief, are interest free if each instalment is paid on time. Full detail is in paying inheritance tax by instalments.

When is tax on lifetime gifts due?

Type of charge Due date
Gift that was potentially exempt but becomes chargeable because the donor dies within seven years Six months after the end of the month of death (section 226(3A))
Lifetime chargeable transfer (for example into a discretionary trust) made between 6 April and 30 September 30 April in the following year (IHTM30153)
Lifetime chargeable transfer made between 1 October and 5 April Six months after the end of the month of the transfer
Extra tax on a lifetime chargeable transfer when the donor dies within seven years Six months after the end of the month of death
Ten year and exit charges on relevant property trusts arising on or after 6 April 2014 Six months after the end of the month of the charge (IHTM30154)

Interest on each runs from the end of the corresponding period under section 233(1). Who pays differs: on a failed potentially exempt gift the recipient is primarily liable and the donor’s personal representatives only secondarily (IHTM30041), while on a lifetime chargeable transfer the donor is primarily liable (IHTM30062). Because the recipient of a gift may not hear about the tax for months, interest often builds up on failed gifts. The background is in the seven year rule and executors’ personal liability.

What if the estate cannot pay on time?

GOV.UK says executors who cannot release funds from the estate and cannot pay another way can ask HMRC to postpone payment. HMRC’s manual (IHTM30159) refers to time to pay arrangements managed by its Debt Management team and to extra statutory concession F6, which lets payment be deferred where foreign government restrictions stop the deceased’s foreign assets being brought to the UK to pay the tax on them; the concession applies only to death transfers. Agreeing time to pay does not cancel interest, which continues to run under section 233 on the unpaid tax.

What happens if too much is paid?

HMRC repays overpaid tax and interest with repayment interest, which runs from the date of the overpayment to the date the repayment is issued (IHTM30341). The rate is base rate minus 1%, with a minimum of 0.5%; GOV.UK shows 2.75% from 9 January 2026. A repayment claim must normally be made within four years of the payment (section 241, IHTM30402). There is a special rule where a court order under the Inheritance (Provision for Family and Dependants) Act 1975 changes who inherits: tax payable or repayable as a result does not carry interest from any date earlier than the order (IHTM30371).

What does the interest look like in figures?

Illustration only. A person dies on 14 March 2026. The tax is due by 30 September 2026 and interest starts on 1 October 2026. The executors pay £40,000 of tax on 15 December 2026. From 1 October to 15 December inclusive is 76 days. Assuming the rate stays at 7.75%, the interest is £40,000 × 7.75% × 76 ÷ 366, which is £643.72. Had they paid £40,000 on account in September, no interest would arise even if the IHT400 followed later.

What mistakes come up most often?

  • Treating the 12 month filing deadline as the payment deadline.
  • Waiting for final valuations before paying anything.
  • Leaving the payment reference until the last week.
  • Forgetting that tax on a failed gift falls on the recipient and carries interest from the same date.
  • Not paying on account when a corrective account will increase the tax.
  • Assuming instalments are always interest free.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.