Inheritance tax 2nd installment

cheeseandcracker

Hello,
My mum passed away and I received probate last year. I am paying the inheritance tax in installments and it is now under a month until the anniversary of my first installment.
I understood that HMRC would write when my second installment is due, but I haven't received anything.  I've tried calling their inheritance tax helpline but given up after 20mins.
Has anyone any experience of what usually happens and whether there is a more direct way of contacting them?
Thank very much!

Keep_pedalling

I don’t know if they actually write to you or not, but there will be penalties if you miss the payment. 

cheeseandcracker

This is exactly why I'm trying to get in touch with them to know how much to pay as interest will have been added 

poseidon1

cheeseandcracker said:

This is exactly why I'm trying to get in touch with them to know how much to pay as interest will have been added 

Good that you are keeping on top of this obligation and not passively waiting for HMRC to get its act together.

Problem here is the interest payable is variable and linked to Bank of England Base rates ( currently plus 2.5% above base rate).

Over the past year there have been 4 reductions from 7.75% to 7% currently,  following  the 6th February  base rate reduction to 4.5%.

The current 7% rate is valid up until 25 February 2025, the next Bank of England meeting to review the base rate is 20 March 2025. 

If you don't receive a calculation/ demand from HMRC within the next fortnight, you could use the IHT interest calculator below to work out the ballpark numbers yourself.


https://www.hmrc.gov.uk/tools/inheritancetax/interest-rate-calculator.htm


Please note you are limited to using start and end dates for the calculator, which are no more than 2 weeks in advance, so as of today you can do a 'what if' calculation into early March, but not your actual anniversary later in March. 

 Running the calculation in 2 weeks time to coincide with your actual anniversary will give a more precise figure.

Not quite what you wanted, but should give you reasonably accruate numbers to organise what you need to pay when the time comes.

Finally in passing you should be aware that IHT interest is proposed to increase to 4% above base rate compared to the current 2.5% above. If Bank Base rate remains unchanged at 4.5% , interest on your future IHT instalment will rise to 8.5% compared to 7% currently.

cheeseandcracker

Thank you very much Poseidon1 for taking the time to leave all that information - I really appreciate it.
A solicitor (joint executor unfortunately) completed all the IT forms on my behalf and although the six month death anniversary would have been the end of February 2024, the first IT instalment wasn't paid until 15th March 2024 - do you know if this date would be my next instalment date, or if it would still be the end of February?  Many thanks.

poseidon1

cheeseandcracker said:

Thank you very much Poseidon1 for taking the time to leave all that information - I really appreciate it.
A solicitor (joint executor unfortunately) completed all the IT forms on my behalf and although the six month death anniversary would have been the end of February 2024, the first IT instalment wasn't paid until 15th March 2024 - do you know if this date would be my next instalment date, or if it would still be the end of February?  Many thanks.

For IHT paid using the instalment option, the intial due payment date is the same as for non instalments ie 6 months after the date of death. See below HMRC guidance.

https://www.gov.uk/paying-inheritance-tax/yearly-instalments

I suspect that if ( as you have intimated)  the first instalment was paid a couple of weeks late, your next assessment calculation from HMRC due quite soon,  may well Include a small interest adjustment for the late payment last year.

If the anniversary ( in your case ) should have been end of this month, then I agree HMRC are cutting it a bit fine to send you the calculation in time.

In your shoes I would use the online calculator based on the February Anniversary date, which should give you a reasonable figure to work with, given that the 7% current   IHT interest rate is valid until  at least 25 February ( and possibly beyond).

cheeseandcracker

Thanks again for your advice.  I tried ringing again today at 9:00am as soon as the telephone lines opened and knew my menu options in advance, so was able to progress through quickly - someone answered immediately! So, for anyone else reading this, if possible ring at bang on 9am knowing your number options.  They were able to provide a figure for me (slightly less than we had worked out) and said that at any stage we could top up payments using our reference number to help reduce interest.  It does seem that they don't send you a letter.