Direct Payment Schemes for Inheritance Tax (IHT423) - Stocks and Shares

navilite

As HMRC have recently (late 2024) changed the rules to enable stocks and shares to be sold before probate is granted so that Inheritance Tax can be paid from the deceased's assets, under their "Direct Payment Schemes for Inheritance Tax (IHT423)", I've been trying to find any provider that has opted into this.

I'm interested in Stocks and Shares ISAs in particular, but also general stock investment accounts.

I've contacted a few brokers, but they all seem slow to get back to me.

I'm aware that most banks seem to have opted in for cash in bank accounts, but it seems difficult to find any information about investment accounts, maybe because the rules only recently changed to allow it for non-cash accounts.

I was wondering if anyone else has found a provider that allows this for investment accounts?

To me, this would be a good selling point of any Stocks & Shares ISA or general investment account as it would solve the circular issue of not being able to access the deceased's assets before probate is granted and not being able to get probate until the Inheritance Tax is paid where the deceased holds significant sums in stocks and shares.

FrugaiMacDugal

Did you look at IHT423, scroll down to Deceased’s brokers/investment management firm account transfer details.

navilite

Thanks @FrugaiMacDugal, yes I've seen the form, and I know it's possible, I just don't know which brokers support IHT423. As it's an opt-in scheme that's only recently introduced, they don't necessarily all support it.

I've so far only been able to get an answer from NatWest Invest, saying they don't support it. NatWest do support IHT423 for cash in bank accounts, so hopefully they'll support it one day soon in their Invest services.

I'm hoping to be able to ensure that investments are with a broker that's opted in to IHT423, rather than leaving a potential problem for executors that they can't fund the Inheritance Tax bill and gain probate because most of the assets are invested.

It would be much easier if HMRC held a central register of the brokers that had opted in!

poseidon1

navilite said:

As HMRC have recently (late 2024) changed the rules to enable stocks and shares to be sold before probate is granted so that Inheritance Tax can be paid from the deceased's assets, under their "Direct Payment Schemes for Inheritance Tax (IHT423)", I've been trying to find any provider that has opted into this.

I'm interested in Stocks and Shares ISAs in particular, but also general stock investment accounts.

I've contacted a few brokers, but they all seem slow to get back to me.

I'm aware that most banks seem to have opted in for cash in bank accounts, but it seems difficult to find any information about investment accounts, maybe because the rules only recently changed to allow it for non-cash accounts.

I was wondering if anyone else has found a provider that allows this for investment accounts?

To me, this would be a good selling point of any Stocks & Shares ISA or general investment account as it would solve the circular issue of not being able to access the deceased's assets before probate is granted and not being able to get probate until the Inheritance Tax is paid where the deceased holds significant sums in stocks and shares.

An interesting recent  development so unsurprisingly the various investment platforms may indeed be slow to implement system changes to  accommodate this facility.

However, with the announced direct IHT  taxation of DC pension pots  in future, it appears  all the platforms which host SIPPs /SSAS  will have to create systems and practices for IHT liabilities they will be  primarily responsible for settling in the first instance.

Going forward, it appears the platforms will find themselves directly co- opted into the HMRC IHT collection and compliance  machinery, to an extent that may either necessitate employment of tax specialist and/or outsourcing to external expertise. Be interesting to see the effect on platform fees for all this extra compliance.

navilite

Just a quick update in case it's useful to anyone else, Scottish Widows and AJ Bell have now confirmed to me that they can sell investments from their Stocks & Shares ISAs and Dealing Accounts to provide funds for paying IHT before probate has been granted.

Hargreaves Lansdown have even been sensible enough to state it on their website: https://www.hl.co.uk/support/what-to-do-when-someone-dies under "Can the HL investments be sold to help cover funeral costs or to pay for inheritance tax?"

Chicken_Little

Thank you, this is very useful to me going through the same predicament. Some companies also have their own schemes for doing this. Findings so far appear to be, Aegon yes, Fidelity have their own scheme, M&G/ PRU, no. Whether sale of some specific shares are allowed, I have yet to discover. Whether there is any flexibility on the  date of sale, and how this will work best with the current Trumpian volatility to consider, I do not yet know. 

navilite

A further update: Interactive Brokers UK have also confirmed that they can sell investments before probate to pay IHT. Luckily I found an email address for their Estate Processing team, who responded very quickly.  The question I originally asked in their message centre is still unanswered after a month and a half.