Inheritance tax and needing to sell house

DealingWithEstate

Hi there,
I am the executor of my mother's estate, and am doing it myself. So far, all fine and I am almost ready to submit. My calculations are that there will be IHT due of around £25,000. Most of her estate is made up of her house, which we will be selling. In addition she has some money in a S&S ISA, and a small amount in a high street bank. 

My query is around the actual payment of the IHT (and some specific queries around page 12 of IHT400.)

Box 110 of IHT 400 says "If you do not elect to pay tax by instalments you must pay all the tax due on the estate when you send us your form IHT400". I do not have £25k sitting around, the money in her high street bank is also insufficient, and the people who have been managing her S&S ISA have been slow to respond to queries, so I am reluctant to involve them. I presume therefore I should request to pay by instalments?

Second question - if I pay by instalments, can I pay this faster than over 10 years? Again, IHT400 Box109, refers to 10 annual instalments, but nothing about being able to pay sooner. My ideal would be to pay a 1/10th (roughly) upfront, and then pay the remaining once the house is sold. Would this be possible?

(I did ring HMRC to ask them, but the person on the line gave me incorrect info - saying instalments were only possible for assets shown in Column A - when the opposite is the case according to Box 109.  So I don't have much faith in her info!)

Final question - what is the benefit of the Direct Payment Scheme (IHT400 Box 120)? 

THanks all!

bobster2

The Direct Payment Scheme (IHT400 Box 120) is used to get banks and building societies to pay IHT directly to HMRC from the deceased person's accounts - before Probate.

I know that you can certainly get them to pay directly from cash accounts (current, savings, cash ISA). Not sure how it works for S&S ISA - whether you can get the financial institution to convert it to cash and pay HMRC direct. Or whether you need Probate first to take control of it.

Keep_pedalling

If you elect to pay by instalment you can pay any outstanding amount as soon as the house is sold. 10 years is just the maximum time frame.

Just checking but have you allowed for her residential NRB as well as her standard NRB in your calculations plus any transferable allowances if she was a widow? 

SeniorSam

Personal allowances before tax being £325,000 each and residential allowances of £175,000 each, so £1,000,000 before taxation is often the case. Just mentioned the figures to make sure you have accounted for them.

DealingWithEstate

THank you for your comments.
RE allowances - yes I have included £325k + £175k, but appreciate you mentioning it. (And she was divorced, so no transferable allowances).

Helpful to know I can pay any outstanding amount as soon as house is sold - so thank you for the answers!