Inheritance Tax Bill - when do you get it? Before, during or after Probate?

pea60s52w

Hi

Probably a daft question but having done the online probate and the IHT400 what's the sequence for correctly paying tax and giving money to beneficiaries?

I've sent the stuff into both proverbial voids, with a 21 working day gap, so in theory IHT should send something over to Probates and it should all link up, but it would be useful to know when and how the final tax bill is determined, confirmed and then sent to the administrator of an estate. What does it look like? Will I get a letter saying no IHT tax owed or £X is owed, before Grant of Probate?

The reason for asking is, one beneficiary is on furlough without pay and is feeling the pinch of having no income.

I have an upper limit idea of how much tax will be payable from the estate and based on that I could easily give that beneficiary a sizeable chunk of their inheritance the second Probate is granted (while holding enough back until the tax bill is confirmed).

sue1976

We have a solicitor taking care of probate for us and she told us that inheritance tax has to be paid before probate. She paid it out of one of our the bank accounts of the deceased and shortly afterwards sent off the probate forms. 

pea60s52w

Thanks and sorry for the delay answering - but when and how did your solicitor get to know how much inheritance tax was due?

I've had the email from Probate confirming they're processing it (and judging by other comments on MSE they could approve it within the next fortnight) and they've also confirmed they got the form from HMRC so I know Revenue and Customs have the IHT case.

What I don't know is how much, if any, HMRC are going to expect.

Not being funny but I've had the super-deep joy of HMRC sending me a "Sorry, mate, we've just figured out that actually you owe us £7000 due to five years of backdated High Income Child Benefit Charge that we have never once told you about" after receiving letters from them every year to the effect of "you absolutely don't have ANY other tax liabilities based on PAYE and your income level, so you do not need to contact us."

If HMRC think a £7k personal tax bill is entirely consistent with "you don't owe us anything and you don't need to contact us", I'd rather wait until I see something in writing that tells me either that tax is owed or it isn't.

Keep_pedalling

Assuming you have sufficient liquid assets in the estate, I would not wait for HMRC, just pay the amount you calculated was owed in box 119 on IHT400.

Don’t risk going over 6 months and be hit with interest payments.

pea60s52w

I calculated nothing but it was one of those edge cases where the net value of the estate was under £325k but there were other assets and unknowables, plus gifts given away, that suggested the estate could finally turn out to be worth far more. If I added known gifts to the form (on the assumption that they are gifts - the guidance is useless so I thought best be safe) it went above the threshold where tax would be due but the form still came out as 0 tax to pay.

Keep_pedalling

pea60s52w said:

I calculated nothing but it was one of those edge cases where the net value of the estate was under £325k but there were other assets and unknowables, plus gifts given away, that suggested the estate could finally turn out to be worth far more. If I added known gifts to the form (on the assumption that they are gifts - the guidance is useless so I thought best be safe) it went above the threshold where tax would be due but the form still came out as 0 tax to pay.

Looking at your other threat, you also had RNRB and some transferable NRB to use, so could go significantly over £325k before IHT was payable, which would explain whips your calculation was zero, and yoy are highly unlikely to ever get a IHL bill, unless you made a big error on the IHT return.

hopefully the OP will have a reasonable grip on how much tax due and can therefore make interim payments to the beneficiaries, keeping sufficient back to meet any tax bill.

Trooper21

We are in a similar position. Everything we read says that you need IHT before Probate...not so.

Applied for probate and IHT, got a Grant of Probate - but nothing from HMRC.

pea60s52w

We have 2-3 weeks before I can start chasing up on probate.

Revised figures put the totality of the estate, gross, at £332k but with NRB it's way under any tax threshold. If a bill does come in, it's covered.

Treetops66

I calculated the tax I thought was due from IHT 400 and paid as per the uk gov instructions on how to pay yur inheritance tax bill. Then applied for probate. Only happened recently so I my have jumped the gun but I don't want any delays as the property is under offer. We are paying the property portion in instalments so I figured any over/under payments would be collected later.

sue1976

Our solicitor told us that we had to pay the IHT before probate would be granted. We’ve paid too much as we took an offer on the property that we are selling. D rather it be that way than underpaying the tax. Once it’s all been granted we will then receive a refund from the overpayment. 

pimento

The solicitor handling the estate of a family friend has taken eight months already and still hasn't applied for probate.  My mum is the other executor and is unable to speak directly to the solicitor who is blaming covid for all the delays.  Who is liable for any interest on the tax?