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We have proven strategies developed over many years to reduce your liability for Inheritance tax. 

What is Inheritance tax: Inheritance tax is payable on the estates value within six months after registration of the death. If payment is not forthcoming within this timeframe HMRC will add interest daily to the amount owed. In some cases penalties as well. 

If the matter becomes protracted because of a conflict of interest between the beneficiaries and those left out of the will the case can drag on for years and cost the estate enormous sums of money in legal costs. HMRC if this situation arises can add penalties as well as interest. 

HMRC can also force the executor to sell certain assets to pay the tax owed. The courts in the UK will allow this to take place. There are options available to the executor including applying for a probate loan to pay the tax owed, these types of loans can be expensive but could be vital in keeping HMRC at arm’s length and to stop the tax due from rising considerably. 

The personal representative (an executor or administrator) for the estate usually pays any Inheritance Tax due before giving you the inheritance.

HM Revenue and Customs (HMRC) will contact you if you have to pay any Inheritance Tax this may happen if the following circumstances apply.

The person who died gave you a gift in the 7 years before they died.

Your inheritance is put into a trust, and the trust does not or cannot pay.

The personal representative could not or did not pay before you got your inheritance.

Other taxes after you inherit you may have to pay: Income Tax on any profit you earn from an inheritance (for example, dividends on shares or rental income from a property) Capital Gains Tax when you sell anything you inherited.

How long after a property is sold before you can receive an inheritance? If you are wondering about inheritance after a property sale, this article explains how long it typically takes from the sale of a home until beneficiaries receive their inheritance. The timeline involves several stages, and delays can occur for tax, debt, or administrative reasons.

Timeline of sale to completion to estate distribution: Once probate is granted, selling the property can take three to six months on average, but lengthy estate agent processes or market conditions can push this timeline longer. 

After completion, the Executor must settle all debts and taxes before distributing the remaining funds to beneficiaries. In straightforward cases, distribution may happen within six to 12 months of probate, but more complex estates can take up to a year or longer to close. 

Delays due to tax or debts: Any outstanding debts, including Inheritance Tax (IHT), must be resolved ahead of distribution, and that can cause delays. IHT is due within six months of death. If the estate’s value is complex or tax calculations take time, it may slow down the sale or availability of funds. 

Additionally, if HMRC needs to review or if refunds are possible, such as loss on sale relief when property is sold at a lower price than its valuation at death, a delay is possible as Executors must submit the correct forms before distributing funds. 

Final estate accounts and beneficiary payment: Once sales proceeds are received and liabilities settled, the Executors prepare final estate accounts. These set out assets, tax payments, fees, and what each beneficiary receives. Accounts must be clear and shared with beneficiaries before final payments are issued. 

After approval of accounts, most estates distribute funds promptly. However, beneficiary payments may still be withheld until the Administrator confirms all claims have been satisfied. 

Example scenario: Suppose the Executor receives probate, sells a house in four months, and pays off taxes and debts promptly. In a simple estate, beneficiaries could receive their inheritance within three months of the sale's completion. But if tax evaluation or claims arise, the timeframe could stretch out, sometimes up to 12 months or more after probate. 

Key takeaway: The time between a property sale and receiving inheritance varies by estate complexity. For uncomplicated estates, beneficiaries often receive their share within a few months after completion. However, property sales, tax filings, debts, possible HMRC reclaims, and final accounting steps can extend the process up to a year or longer in exceptional circumstances. 

When Do You Pay Inheritance Tax On Property In The UK? In the UK, inheriting a property and paying any tax on it will often depend on the total value of an estate and the application of specific allowances and reliefs. For many of those who inherit property, particularly when inheriting a family home, understanding these details can prevent unexpected tax burdens and with appropriate planning, potentially avoid them entirely.

Whilst explaining how and when an individual may be required to pay inheritance tax on an estate is important, it is equally essential to understand exactly what inheritance tax is before we begin to focus specifically on when and how this tax applies. 

Inheritance Tax is a tax on the estate (property, money, and possessions) of a person who has passed away. In most cases, the beneficiaries of the deceased’s estate have six months to pay any outstanding balance due to HMRC, or else face interest charged on any amount owed. Executors must work out the total value of the deceased estate and calculate how much inheritance tax is due before they make any payments.

Typically, Inheritance Tax is charged at 40% on any amount exceeding a specific allowance known as the nil-rate band. If the total estate of the deceased, including all properties, is valued below this threshold, then no tax is payable, however, when the estate’s total value exceeds this threshold, tax may be due on any amount above this level.

The nil-rate band is a threshold that applies to all estates, but an additional allowance exists specifically for property intended to be passed on to direct descendants, known as the Residence Nil-Rate Band (RNRB). The RNRB is currently set at £175,000, which when combined with the standard nil-rate band set at £325,000 for the 2024/25 financial year means a parent’s estate can potentially pass on for £500,000 free from Inheritance Tax, provided the family home is included in the inheritance.

This additional allowance only applies if the home is left to a direct descendant, such as a child or grandchild. If the property is left to someone else, such as a sibling or friend, the RNRB does not apply, reducing the total tax-free threshold to £325,000 and potentially leading to a higher tax bill. 

One critical feature of the Inheritance Tax system is the transferability of unused allowances for married couples and civil partners. If one partner dies and does not fully use their Inheritance Tax allowances, these can be transferred to the surviving partner.

For example, if the first parent’s estate did not reach the £325,000 nil-rate band, or if the RNRB was not fully utilised, the unused portion can be added to the second parent’s allowance. Upon the second parent’s death, the combined tax-free allowance could be as high as £1 million. 

This can significantly reduce or eliminate the tax burden on estates valued up to £1 million when including the family home, a relief measure specifically designed to protect inheritances passed directly to children or grandchildren. However, for estates exceeding £500,000 for individuals or £1 million for couples, paying Inheritance Tax becomes far more likely.

Do You Have To Pay Inheritance Tax On Assets: If an estate, including the family home, totals £700,000 and the combined nil-rate band plus RNRB is £500,000, Inheritance Tax will be applied to the remaining £200,000. At the standard rate of 40%, this would mean a tax payment of £80,000 on that additional amount. For particularly high-value estates, the RNRB gradually decreases once the estate value exceeds £2 million. 

This reduction, known as tapering, lowers the RNRB by £1 for every £2 that the estate exceeds the £2 million threshold. As a result, estates valued above £2.35 million lose the RNRB entirely, returning the tax-free allowance to the basic nil-rate band of £325,000. Estates in this higher range can therefore face significant Inheritance Tax Bills, given the 40% rate applied on amounts above the lower threshold. 

Beyond passing on the home through inheritance, some parents consider gifting property to their children during their lifetime to reduce potential Inheritance Tax liabilities. However, this approach comes with considerations. When a property is gifted, it remains subject to Inheritance Tax if the parents do not survive for seven years after the gift is made. This is known as the "Seven-Year Rule."

This rule applies a sliding scale, known as taper relief, to reduce the amount of Inheritance Tax owed based on the number of years between the gift and the person’s death. If the parent dies within three years, the full 40% tax rate applies, but if they survive between three and seven years, the rate gradually decreases, reaching 8% in the final year before the gift becomes entirely tax-free.

A further consideration when gifting property is the “Gifts With Reservation” rule, which states that if parents give away a property but continue to live in or use it without paying the market rent, the gift will still be considered part of the estate and subject to Inheritance Tax. However, if they pay the market rent whilst living at the property, the gift can be considered fully given and will not count toward the estate’s total value after the seven-year rule. 

If the parents later need to live in the home due to illness or old age, they can remain without affecting the gift’s inheritance Tax status, provided they meet the seven-year condition for gifting the property away. For parents who sell or downsize their home but wish to pass on the proceeds, the RNRB may still apply under specific circumstances. 

This benefit is known as “downsizing relief,” and allows the estate to use the RNRB if the original property has been sold, but the equivalent value is passed to children or grandchildren. The relief ensures that the tax benefit associated with a primary residence is not lost if the home is sold before death. It is a valuable planning tool for parents who may need to downsize while intending to provide a significant inheritance. 

Other Reliefs From Inheritance Tax: In cases where the family home forms part of a working farm or business, additional reliefs may further reduce Inheritance Tax liability. Agricultural Property Relief, for example, allows up to a 100% reduction in the value of agricultural property used within a farm business, such as employee housing or storage facilities, which can eliminate Inheritance Tax obligations on qualifying property.

Business Relief, although slightly more complex, can reduce the taxable value of business assets by up to 50% however, covenants are most strict about the property qualifying for business relief rates, and a clear foundation is required that evidence the use of the property for employee accommodation. Estates that include farm or business properties may therefore benefit from both specialised reliefs that can drastically reduce or eliminate tax liability due on these valuable property assets.

Whether is a question of paying or not paying Inheritance Tax on property, some clear rules and regulations govern the process which makes it feel less complicated. By understanding how exemptions can be applied, beneficiaries can mitigate or avoid paying tax on many inherited properties.

Forward planning, and a clear understanding of the rules around the nil-rate band, RNRB, and specific rates of relief can help avoid substantial tax burdens. Consulting an Accountant specialising in inheritance tax can provide strategies to minimise the impact of inheritance tax, ensuring valuable assets are passed on without incurring taxes.

What happens if I do not pay inheritance tax when it is due. HMRC will apply interest and penalties to the amount that is owed. The penalties can be severe not just financial but also prosecution and potential imprisonment. 

You will of course still owe the money and if you have any assets HMRC will confiscate them for the debt owed. We have acted for clients who deliberately did not pay the Inheritance tax when it was due. 

We managed to negotiate a payment option with HMRC for some of these clients, however a limited number were prosecuted by HMRC and in four cases imprisonment followed. 

Do I need the services of an Accountant: You should employ the services of a professional if you think the estate could incur higher levels of inheritance tax or is complex. 

Complicated estates include those estates with multiple properties, Ltd company involvement, shares, artwork, precious gems including jewellery, classic cars, overseas assets, crypto currencies, and many other items of value. In these circumstances you should always appoint a professional to maximise the value of the estate and minimise any tax liabilities. 

We have helped many clients reduce the estates tax liabilities, while at the same time making the process simple enough for the executor and beneficiaries to have confidence in the services we provide. 

What really happens after you submit IHT400 Form HMRC: 

If you are an executor dealing with someone’s estate right now, you have discovered that inheritance tax forms come with their own special brand of anxiety. The IHT400 form is not a quick Friday afternoon job it is comprehensive, demanding, and frankly, more than a little intimidating.

You have just lost someone, you are grieving. And now HMRC wants you to account for every asset, every debt, every gift made in the last seven years. Oh, and they would like accurate valuations, please. No pressure.

What Actually Happens When You Submit Your IHT400 Form: 

HMRC states they will issue the IHT421 within fifteen working days of receiving your IHT400 or payment of the tax due, whichever comes later. The IHT421 is HMRC’s stamp of approval the document that says “yes, we’ve seen this, and you can now apply for probate.

But and this is a sizeable but that is just for straightforward estates. Simple cases where the numbers add up, nothing looks suspicious, and HMRC’s computers do not decide your submission needs “further review.

The 20-Day Rule Everyone Forgets: Here is where it gets interesting. HMRC now recommends waiting twenty working days from when you submit your IHT400 before you even think about applying for probate. Why? Because they changed how the system works, and if you apply too early, your application and their IHT421 will not match up properly. 

The process changed in May 2020 when HMRC stopped printing and physically stamping forms. Now they email the IHT421 directly to HM Courts and Tribunals Service (HMCTS). Modern and efficient, right? Except when the matching system goes wonky and your probate application sits in digital limbo because the computers cannot find your IHT421. 

If your application is flagged or selected for a compliance check by HMRC this can add another three months to the process. If HMRC believe the IHT400 is incorrect or deliberately undervalued the process can go on for at least another six months to a year.

If you have not heard from HMRC within 12 weeks of them issuing your IHT421, you can assume they are not going to question your figures. That is the good news. The slightly chilling news? During those 12 weeks, HMRC might decide your estate needs closer scrutiny.

What Triggers Extended Processing for IHT400 Forms? 

HMRC does not randomly pick forms to examine. They are looking for specific red flags:

Substantial lifetime gifts: Especially those nudging close to or exceeding the nil-rate band. Complex business assets: Business Property Relief claims get extra attention.

Property valuations that seem creative: For example, your £600k London terrace is valued at £400k, expect questions. Multiple properties, particularly overseas assets

Trusts (HMRC finds trusts inherently suspicious) Large pension death benefits being claimed.

If your IHT400 form includes gifts within seven years of death that total more than the available nil-rate band, HMRC will take longer to issue probate codes. Cases involving lifetime gifts will be referred for review before codes can be issued, which can add weeks to the process.

The Backlog Nobody Wants to Discuss: Processing times for IHT400 forms in 2025 are not about the complexity of your estate they are also about HMRC’s capacity.

Despite significant increases in IHT400 submissions, HMRC claims they are processing over 90% within their 15-day target. That is actually quite impressive. The other 10% are the complex estates, the ones with questions, the ones that require human eyes rather than algorithmic approval.

On more complex case HMRC will ask the Valuation Office Agency to check property values. Get the Shares and Assets Valuation team to verify investment portfolios.

Request additional documentation about gifts or business assets. Contact you with specific queries (they will phone, usually within 8 weeks of their letter)

The Clearance Certificate Question: Should you apply for formal clearance using form IHT30? That is the belts-and-braces approach. HMRC will not normally issue one until at least a year after death, and only when the tax position is absolutely final. For most estates, the 12-week silence rule is sufficient protection. But if you are dealing with substantial assets or nervous beneficiaries threatening to sue if anything goes wrong? Get the clearance certificate. It is worth the wait.

You cannot control HMRC’s workload or their decision to examine your submission. But you absolutely can control how clean your submission is. A well-prepared IHT400 form is your best defence against delays.

Get Your Valuations Bulletproof: This is where amateur hour costs you time. That Edwardian terrace in Wandsworth? Get a proper chartered surveyor’s valuation, not your mate Barry’s estimate. Share portfolios? Download the actual closing prices from the date of death. In 2024, 15% of IHT400 submissions were queried for valuation errors.

For assets over £1,500, professional valuations are not just sensible they are your shield. For cheaper items, you can estimate but be reasonable.

Document Everything Before You Start:

Bank statements for the last 12 months.

Investment portfolio valuations at date of death

Property valuations (professional ones)

Details of all gifts made in the seven years before death.

Business accounts if claiming Business Property Relief

Pension scheme statements

Life insurance policy documentation

Mortgage statements and other debts.

Funeral expense receipts

The Payment Timeline: Here is a fun paradox: HMRC will not process your IHT400 form until you have paid the tax. But you cannot access estate funds to pay the tax until you have probate. Which you cannot get until HMRC processes your IHT400 form.

The deadline is firm: inheritance tax must be paid within six months of death to avoid interest charges. Interest currently runs at 7.75% per year on overdue payments, which adds up frighteningly fast on large estates.

Your options? Pay from liquid assets in the estate (if you can access them without probate)

Pay from your own funds and reclaim from the estate later.

Use the Direct Payment Scheme if there are UK bank or building society accounts.

Arrange instalments for certain assets (property, business assets, unquoted shares) using form IHT420. Arrange a probate loan to pay your inheritance tax bill.

Do not forget you need an Inheritance Tax reference number before you can pay. Apply at least three weeks before you submit your IHT400 form. This is separate from submitting the actual form and catches people out regularly.

What If HMRC Questions Your IHT400 Form? Do not panic. Questions do not automatically mean you have done something wrong. HMRC might simply need clarification or additional evidence.

Responding promptly is crucial. HMRC usually gives reasonable deadlines but missing them triggers further delays and potential penalties. If you need more time to gather documentation, ask. They are accommodating if you are clearly making genuine efforts.

Getting Professional Help with IHT400 Forms: The IHT400 form is not designed for amateurs. It is not that you are incapable it is that the stakes are remarkably high and the room for error small.

Consider this: The deadline for submitting an IHT400 form is 12 months after death. Miss it? Penalties can reach £3,000, depending on how late you are and how much tax is owed. Submit it with errors? Penalties can go up to 100% of the tax due for failing to report gifts correctly.

This is where firms like Accountants earn their fees. Yes, you are paying for the service. But you are buying peace of mind, accuracy, and crucially time. Professionals know which schedules to attach, how to claim reliefs properly, and what triggers HMRC scrutiny.

When to Definitely Use an Accountant:

Estate value over £500,000

Any business assets or agricultural property

Foreign assets or beneficiaries abroad

Complex gift history

Trust involvement

You are feeling overwhelmed (perfectly valid reason)

Common Mistakes that extend IHT400 processing times: Do not estimate substantial assets. Bank balances vary daily get the exact figure for the date of death. Share prices fluctuate look up the actual closing price. Property values matter get a professional opinion, not Rightmove’s estimate.

Forgetting about jointly owned assets: If the deceased owned property as joint tenants (not tenants in common), their share passes outside the will but still forms part of the estate for IHT purposes. This confuses people constantly.

Gifts totalling over £3,000 in any tax year must be reported. The annual exemption is per tax year, not per recipient.

Missing the Residence Nil-Rate Band: If the main residence passes to direct descendants, you might get an additional £175,000 allowance on top of the standard £325,000. But only if you claim it properly. Many executors leave money on the table here.

Submitting original documents: HMRC has repeatedly said: send copies, not originals. Yet people still send irreplaceable wills and title deeds. Please do not do this.

What’s Changed for IHT400 Forms in 2025? HMRC tinkers with the IHT400 form regularly. Recent updates include:

Enhanced bank detail requirements for repayments they need account name, number, and sort code upfront.

Updated death benefits terminology (they have stopped calling them “lump sums”)

Stronger emphasis on the online tax checker before submission

Revised domicile provisions affecting non-UK domiciled individuals.

Direct digital submission of IHT421s to courts (no more paper trail)

The threshold figures remain stable for 2025: £325,000 nil-rate band, plus potentially £175,000 residence nil-rate band. Together, married couples can shield up to £1 million from inheritance tax if they plan properly. 

Life After Submitting Your IHT400 Form: Once HMRC processes your form and issues probate clearance, you can finally start distributing the estate. Even after the grant is issued, HMRC can reopen cases if new information emerges. That is why many executors wait for either the 12-week silence period or a formal clearance certificate before distributing significant assets.

Keep meticulous records of everything: every bank transfer, every asset sale, every expense paid. Estate accounts should reconcile perfectly. Beneficiaries have years to challenge your actions as executor, and good documentation is your defence.

If asset values change after submission shares crash, property values fall you can claim relief. Use form IHT35 for shares sold at a loss within 12 months of death, or IHT38 for property sold at a loss within four years. These claims can save substantial amounts, but timing matters.