Paying Inheritance Tax should be completed by the end of the sixth month after the deceased has passed. If this is not done, HMRC will begin charging interest on the amount due. If there are assets which may take longer to sell, such as property, payments can be made in instalments over a period of 10 years. However, interest will still be charged on the outstanding amount.
Once the asset has been sold, and if there's still Inheritance Tax to be paid, all remaining instalments (including interest) must be paid immediately after the sale. Even if the estate hasn't been valued, it's a smart idea to pay some of the tax within those first six months after death. This is referred to as 'payment on account' and can save considerable interest costs.
It's also possible for an executor or administrator to pay the tax from their own account. They can then reclaim it from the estate. This is another effective way to avoid unwanted interest fees on unpaid IHT. Executors or administrators of the estate need to submit an account of the estate within one year of death to avoid a penalty.
HMRC will also refund the estate if it has overpaid Inheritance Tax. You can learn more about paying Inheritance Tax through Gov.uk.