IHT installments

Forestfreak

I understand you can pay IHT in instalments if a property is passed on to the children. If the estate has enough cash in bank accounts to pay the IHT (including that in property) do you have to use the cash to pay it or can you still pay in instalments for the effective IHT for the property passed on? I hope that makes sense.

Hoenir

HMRC may well ask for a sizable amount of the potential IHT liability to be paid on account prior to granting probate. How the remaining estate is to be divided is of no interest to them. 

Keep_pedalling

The installment option is to cover situations where the estate does not have sufficient liquid assets to pay the bill, it has nothing to do with who the estate had been left to. If you have enough to cover the bill it would be foolish not to do so because the interest the estate will be paying on the unpaid amount is 7.75%

Forestfreak

Thank you both. I understand that given the interest you would likely not want to pay by installments. However I am just trying to identify my options - is installments an option? 

Keep_pedalling

My understanding is that you can pay any tax on certain illiquid assets by instalments, so if for example the IHT bill was £200k and 50% of the estate was a house and 50% cash you could only pay half by instalments. Having said that the IHT 400 notes on page 52 could be read a different way.

Forestfreak

I have just read the IHT guidance and that’s my interpretation also …. If you had £500k in the bank and a £500k bank …. You have to pay the IHT for the £500k cash but can pay for the £500K house in instalments? 

Forestfreak

Sorry I meant £500knin back and a £600k house …

Forestfreak

Typo .. £500k cash and £500k house …