Page 3 | Paying IHT

waitingforpost · 2025-08-06T17:03:35+00:00

The pension changes means more people will get pulled into the IHT threshold & on here a lot of people talk about their 1m plus homes. Should the 6 month limit to pay free of interest be increased? Surely most can't pay it until a house is sold?

Toastandbutterand · 07/08/2025 01:43

Enrichetta · 07/08/2025 00:31

I agree with @DancingFerret that appointing a bank or solicitor as executor is very unwise as their fees are absolutely horrendous. Your mother can appoint you as executor. There are books that help people deal with winding up estates, and if you were to get stuck you could always seek ad hoc legal advice for specific issues.

By the way, I believe MSE has a forum about financial matters which is highly rated. If you have further questions, why not ask there.

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Thankyou. I honestly thought it was the best thing to just let the bank deal with it!

I'm very glad I asked!

LemograssLollipop · 07/08/2025 08:00

First consult a solicitor or tax advisor and get professional advice
to confirm if there may actually be an IHT bill and what allowances are available. There is a lot of misinformation evidenced by reading just this thread and each person's circumstances are different.

Don't appoint a bank or solicitor as an executor, their fees can be high but if you are an executor and the estate is paying IHT, make sure you get professional advice to check the calculation is right and you haven't paid too much or too little tax. It's a complex area and people using the Internet or worse, chat gpt, to help them makes me shudder.
If an estate is paying IHT it can afford proper advice!!!

LemograssLollipop · 07/08/2025 08:08

@Toastandbutterand can you and mum sit down and talk this through? Then you will know exactly what assets she's got and what you eventually will deal with. Much easier to get the info from her now then have to sift through her paperwork after she's died and you are grieving and can't think straight.

Review the will. May need updating?

The point about immigrants... Presume mum is uk citizen so UK law applies to her estate and tax allowances mentioned in this thread are available?

Check if she owns assets abroad.

RedRiverShore5 · 07/08/2025 08:13

Toastandbutterand · 06/08/2025 23:26

How does this work with property?

My mum's asset rich but cash poor. Shes 80 next month, and horribly, this is something I've started to think about. Her properties are just over a million (or just under) but her pension is £30,000 a year. She'll leave no cash. She occupies all properties.

I have no issues paying iht. I'd happily pay more. But I have a minimum wage job and live in a council house, they can't get anything until the estate is sold!

I have suggested she should leave it to someone else but she's horrified by this. We are immigrants if this makes a difference. There's just not enough money for a solicitor.

Sorry to hijack, we were talking about it earlier and then I saw this thread! Any advice would be gratefully received. I wondered if I should try and donate it?

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I'm guessing if she is asset rich and cash poor the pension is DB (final salary) which die with the person or get paid to a spouse and are not subject to IHT. Also if it is an annuity from a DC pension it may also just end when a person dies, my DF's did. So the pension may not be included at all

Harassedevictee · 07/08/2025 09:14

Notsuchafattynow · 06/08/2025 19:11

I think you'll get little sympathy tbh. If an estate is large enough for IHT, then it's over 1 mil.

And (if I remember correctly), the first mil is not taxed, only the amount over. So yes, while I imagine it's a pain or difficult to pay it up front, it's on the basis you're about to get significant assets.

This is not true for everyone.

The £1m is for a married couple with a home worth more than £350k and who have DC who inherit.

A single person with no DC pays IHT on everything over £325k.

TakeMe2Insanity · 07/08/2025 12:40

Toastandbutterand · 06/08/2025 23:26

How does this work with property?

My mum's asset rich but cash poor. Shes 80 next month, and horribly, this is something I've started to think about. Her properties are just over a million (or just under) but her pension is £30,000 a year. She'll leave no cash. She occupies all properties.

I have no issues paying iht. I'd happily pay more. But I have a minimum wage job and live in a council house, they can't get anything until the estate is sold!

I have suggested she should leave it to someone else but she's horrified by this. We are immigrants if this makes a difference. There's just not enough money for a solicitor.

Sorry to hijack, we were talking about it earlier and then I saw this thread! Any advice would be gratefully received. I wondered if I should try and donate it?

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Your situation re your mum was similar to mine. When she died the market had peaked, by the time probate had been granted the interest free period had passed, the market had dropped, i am struggling to sell. Instead of any empathy from my “case worker” (because this is a bereavement, I’ve had a baby in an unplanned nicu stay for 8 weeks) I should look to selling my home and making my children homeless as a result! If I could back in time I would get her to sell, enjoy more on herself etc. Good luck.

Eunomia · 07/08/2025 15:28

Insurance taken out to pay interest or tax on an event that will definitely happen is…a challenge. Insurance taken out by an over 80 year old to cover tax or interest that will definitely be payable in the event of their death is…a challenge.

MrsBennetsPoorNerves · 07/08/2025 15:36

Yanbu for thinking that more time should be given. I support the idea of IHT but people shouldn't have to worry about this while they are grieving, and the practicalities often take so much longer to sort out.

Original poster

waitingforpost · 07/08/2025 15:59

@Eunomia that would be my thinking

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tramtracks · 07/08/2025 16:01

Notsuchafattynow · 06/08/2025 19:11

I think you'll get little sympathy tbh. If an estate is large enough for IHT, then it's over 1 mil.

And (if I remember correctly), the first mil is not taxed, only the amount over. So yes, while I imagine it's a pain or difficult to pay it up front, it's on the basis you're about to get significant assets.

That’s not correct. Only so if the residence tax expansion comes into play.

tramtracks · 07/08/2025 16:02

Eunomia · 07/08/2025 15:28

Insurance taken out to pay interest or tax on an event that will definitely happen is…a challenge. Insurance taken out by an over 80 year old to cover tax or interest that will definitely be payable in the event of their death is…a challenge.

Especially those parents with dementia.

Waterbortle · 07/08/2025 16:05

As PP says you can't sell the house until probate is granted, and you can't get probate until the tax is paid, so practically you can't use the house proceeds, or anything else from the estate, even if there's cash, to pay the tax.

So, what is the process? You have to borrow to pay the tax? Where from?

Waterbortle · 07/08/2025 16:07

Waterbortle · 07/08/2025 16:05

As PP says you can't sell the house until probate is granted, and you can't get probate until the tax is paid, so practically you can't use the house proceeds, or anything else from the estate, even if there's cash, to pay the tax.

So, what is the process? You have to borrow to pay the tax? Where from?

I don't have any problem with the tax being paid, fwiw I think if there's that much money, tax should be paid, but I don't know how to do it at a practical level.

FinallyHere · 07/08/2025 16:11

Life insurance (lump sum) written in trust

In trust so that it is outside the estate of the deceased

pays out to the beneficiary (singular or plural) pretty fast once provided with death certificate

the earlier it is purchased the lower the cost.

really really simple, does require planning ahead

SamphiretheTervosaur · 07/08/2025 16:20

Tropicalsunshine · 06/08/2025 18:57

You can't sell the house until the tax is paid and probate granted. If you can't pay you can pay in installments but that incurs interest. It's not user friendly!

That has always struck me as insane

Had my parents or grandparents owned their homes we couldnt have afforded to pay before selling. I would have presumed there's some mechanism to get around it, but this suggests a lack of that kind of logical legislation

GasPanic · 07/08/2025 16:24

Waterbortle · 07/08/2025 16:07

I don't have any problem with the tax being paid, fwiw I think if there's that much money, tax should be paid, but I don't know how to do it at a practical level.

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If there is a common problem in life there is always a solution. Someone will of course will make some money out of providing that solution.

Google is your friend.

Schoolchoicesucks · 07/08/2025 16:25

Can I ask a question about the £1m combined threshold for a married couple?

If a married couple between them own a £1m home that they intend to pass onto their children, one of the couple dies and "their £500k" relief is transferred to their surviving spouse. If they then remarry, what happens to the IHT relief pot? Could someone potentially wind up with £1.5m of IHT free relief if they were transferred 2 lots of £500k plus their own £500k relief?

SmallGoddess · 07/08/2025 16:28

Waterbortle · 07/08/2025 16:05

As PP says you can't sell the house until probate is granted, and you can't get probate until the tax is paid, so practically you can't use the house proceeds, or anything else from the estate, even if there's cash, to pay the tax.

So, what is the process? You have to borrow to pay the tax? Where from?

You can arrange for cash to be paid directly to HMRC before probate is granted.

The tax owing on the proportion of the estate that is the house can be paid in 10 annual installments and you only need to pay the 1st installment before probate is granted. (The unpaid fraction accrues interest from 6 months after the death as mentioned by PPs)

I did this all a couple of years ago and the main issue was the bank taking 6 weeks and lots of chasing to actually hand the cash over.

Waterbortle · 07/08/2025 16:31

SmallGoddess · 07/08/2025 16:28

You can arrange for cash to be paid directly to HMRC before probate is granted.

The tax owing on the proportion of the estate that is the house can be paid in 10 annual installments and you only need to pay the 1st installment before probate is granted. (The unpaid fraction accrues interest from 6 months after the death as mentioned by PPs)

I did this all a couple of years ago and the main issue was the bank taking 6 weeks and lots of chasing to actually hand the cash over.

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Thank you, my Dad has been creating drama about this, but I knew there must be a solution, it's hardly a rare occurance

Seaitoverthere · 07/08/2025 16:36

My Dad’s estate incurred IHT and the total value of his estate was just over 100k, most of which was tied up in the house he lived in.

It was because the he lived in was subject to a deed of trust where he had a quarter share but because he was able to live in it for the rest of his life the full value of the house was taken for his estate. It was all a bit of a nightmare getting the money to pay for it after 6 months but thankfully I was able to manage it .

The sale of the house then fell through as another family member died and it ended up selling for a fair bit less than had been put on the probate form as the solicitor used the original sale price which was a fair bit higher than when he died but we were going to run with it. We had to apply for a refund of the IHT which took 10 months. It was all a nightmare and made worse by the other members of the family not understanding why any IHT was due, I am estranged from most of the family now.

Original poster

waitingforpost · 07/08/2025 16:37

Google is your friend.

Why bother to write such a stupid comment?

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WallaceinAnderland · 07/08/2025 16:37

RedRiverShore5 · 06/08/2025 19:09

I see that the house can't be sold until the tax is paid, why is this.

You can sell the house.

HMRC will let you pay IHT in installments (but they charge interest). Once the house is sold you pay off the balance.

Original poster

waitingforpost · 07/08/2025 16:38

Life insurance (lump sum) written in trust

Most people life insurance ends with their mortgage though. Getting life insurance for an 80 yr old will surely be expensive?

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Sagedragon · 07/08/2025 16:39

Unilaterallyinsane · 06/08/2025 19:00

If you are rich enough to go over the IHT threshold, you need to take out an insurance policy which will cover interest before probate is back.

Probate won't be granted until IHT is paid.

Original poster

waitingforpost · 07/08/2025 16:40

@Seaitoverthere sorry to hear that

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