Is inheritance tax paid before probate?
You may be liable for inheritance tax if on death if your estate is worth more than £325,000 or in the case of a married couple or those in a civil partnership £650,000.
Depending on the exact make-up of the estate their maybe other allowance that you can claim and as an executor would need to make yourself aware of these when offer calculating taxation on behalf of the HMRC and beneficiaries.
How Long does an executor have to pay inheritance Tax?
As an executor you must pay inheritance tax within six months of testator’s death, failing to pay the inheritance tax owed within the 6 months of death will mean the estate starts to incur interest in the favour of HMRC.
Can I pay inheritance tax in instalments?
HMRC will on occasion let executors pay via instalments provided they are happy with how the probate is being administered as an executor though you should be aware that should the HMRC agree to this course of action you are still liable for the tax owed.
If you are concerned that you won’t be able to juggle the administration of the estate and the payment of tax, for example on the occasion that a property needs to be sold in order to pay the inheritance tax then you are best advised to instruct a probate solicitor to handle this for you. Unlike a private individual a solicitor can issue an undertaking to pay the tax on your behalf out of estate funds once the property has been sold. HMRC will often look more favourably on this type of arrangement as its easier for them to manager.
Is there anything I can do to mitigate inheritance tax post death?
Sometimes yes, this will depend on how the assets are owned in the case of a couple ensuring the property is registered correctly and in a fashion that can account for what known as the dual rate band you maybe able to save on inheritance tax during the probate process. Understanding how a property is registered for the purpose of probate is an important pat of an executor’s responsibility.