Paying IHT before selling assets

[Justaboutalive]

DM has very recently died.

I have split the sadmin tasks with siblings and I’m doing the getting to probate stage so we can dispose of the assets. I would really appreciate some guidance.

estate will consist of:

1. A property - £1.8m
2. Articles already signed over to an auction house, but not due to be auctioned until September - £80k
3. An item not yet signed over to auction house (but verbally agreed) £100k.
4. A current account that has enough to pay for the funeral and a year’s worth of property bills.
5. Liquid funds and premium bonds £150k

I know all the liquid funds can be transferred to the IHT account with HMRC, but do you think we’ll be able to keep the money in the current account for costs until the house is sold?

How likely is it that we will be able to get the “pay over 10 years scheme” for the property (then pay it all off when it’s sold and will this delay getting probate?

Do I have to stop the sale of the estimated £80k sale in September? To note this is the final half of a collection, the first half already completed and forms the major part of the liquid funds.

what chance do you think I have going forward with the semi agreed £100k auction. These very specialist auctions are held annually and missing it would be difficult?

you only get 6 months from death to pay IHT before you are charged a lot of interest. I think I will need to pay around £500k, but can’t unless I can sell some assets. Also, I’ve been told probate is taking 26-24 weeks. None of us will be able to get the £350k loan needed to pay this tax bill, before we can sell the assets.

just for info, we were liquidating DM assets to pay for care fees, but hadn’t got further than the first half of auction 2). The plan was for DM to move into a very nice home, as soon as the auctions 2 and 3 had completed, then sell the house to pay fees when that money was used. DM died quite suddenly, when we thought we still had her for 4-5 more years.

What do I do? I’m generally good at bureaucratic admin, but this has me running in circles!

I think you need specialist tax advice given the size of her estate. I'd get a couple of quotes

Thanks. I actually spent my working life as a tax specialist, albeit in a very different area. It is not the calculation of the tax, but the timing of paying it and whether anyone else has experienced similar scenarios.

we are not going to try schemes to reduce the tax (a joint decision already made) but cannot pay it unless we can sell things.

the pay over 10 years seems to have a ‘rarely granted’ reputation, but I’ve read they loosened the criteria around March.

Sorry for your loss @Justaboutalive I’m afraid this isn’t something I know about and would suggest getting professional advice. If you just want some more background, Martin Lewis did a podcast on IHT recently, which had a question on this (although I can’t remember the details, sorry). That might be a good place to start to find out current practices.

I suggest contacting a probate specialist with your query, ICAEW have a register. It’s important to get it right so you need to pay for advice.