Direct Payment Scheme for IHT

lake888

I am doing some planning and discussing with the potential executor to use Direct Payment Scheme to pay IHT when I pass.  Is it too risky to rely wholly on DPS and usually how long for banks to make the payment to HMRC?

Keep_pedalling

As you are talking about banks I am rather assuming you are talking about large cash deposits rather than equities, in which case I would not keep to much with single financial institutions so that the bulk could be released without the need for probate. 

Why are you thinking about a single executor? I would have thought your husband should be appointed as well, unless he is highly unlikely to survive you. 

SoozyJ22

We used DPS to pay IHT earlier this year and all the payments were made within a week of being requested. This was with Nationwide, Virgin, NS&I and Monmouthshire Building Society.

We were planning to use an Investec account rather than NS&I but they don't support DPS which caused a small panic when we realised - but NS&I turned out to be quite straightforward in spite of needing to use a few different accounts/bonds/savings certificates to make up the necessary amount. 

lake888

@Keep_pedalling I think I will have cash in banks and Stocks & Shares ISA when I pass.  If my husband predeceases me, I believe I don't need to pay IHT because of spouse exemption.  It's our niece who would be  the executor when I pass so just need to do a bit of planning.

lake888

SoozyJ22 said:

We used DPS to pay IHT earlier this year and all the payments were made within a week of being requested. This was with Nationwide, Virgin, NS&I and Monmouthshire Building Society.

We were planning to use an Investec account rather than NS&I but they don't support DPS which caused a small panic when we realised - but NS&I turned out to be quite straightforward in spite of needing to use a few different accounts/bonds/savings certificates to make up the necessary amount. 

It's good to know DPS did work nicely.  I suppose there is no upper limit for the banks/Building Societies to make the payment to HMRC as long as there are sufficient balance?  I have some stocks & shares ISA that I might need to check further.

Keep_pedalling

lake888 said:

@Keep_pedalling I think I will have cash in banks and Stocks & Shares ISA when I pass.  If my husband predeceases me, I believe I don't need to pay IHT because of spouse exemption.  It's our niece who would be  the executor when I pass so just need to do a bit of planning.

I would still make your husband an executor, it is always advisable to have more than one. We have appointed each other plus our two children. 

lake888

Keep_pedalling said:

lake888 said:

@Keep_pedalling I think I will have cash in banks and Stocks & Shares ISA when I pass.  If my husband predeceases me, I believe I don't need to pay IHT because of spouse exemption.  It's our niece who would be  the executor when I pass so just need to do a bit of planning.

I would still make your husband an executor, it is always advisable to have more than one. We have appointed each other plus our two children. 

Yes we have appointed each other as executor in our will and niece as the back up.

JamesRobinson48

lake888 said:

SoozyJ22 said:

We used DPS to pay IHT earlier this year and all the payments were made within a week of being requested. This was with Nationwide, Virgin, NS&I and Monmouthshire Building Society.

We were planning to use an Investec account rather than NS&I but they don't support DPS which caused a small panic when we realised - but NS&I turned out to be quite straightforward in spite of needing to use a few different accounts/bonds/savings certificates to make up the necessary amount. 

It's good to know DPS did work nicely.  I suppose there is no upper limit for the banks/Building Societies to make the payment to HMRC as long as there are sufficient balance?  I have some stocks & shares ISA that I might need to check further.

I phoned Nationwide the other day with that question. The CS person said there's no monetary limit, and didn't miss a beat when I proposed a single £500k payment. 

Just be mindful of leaving enough £ in each individual savings account to keep it open and avoid triggering closure interest (if that is your wish). For example, Leeds BS CS suggested leaving at least £50 in each fixed rate bond. Whereas a few savings institutions seem to have a £500, £1k or £2k minimum for fixed rate bonds.

JamesRobinson48

SoozyJ22 said:

We used DPS to pay IHT earlier this year and all the payments were made within a week of being requested. This was with Nationwide, Virgin, NS&I and Monmouthshire Building Society.

We were planning to use an Investec account rather than NS&I but they don't support DPS which caused a small panic when we realised - but NS&I turned out to be quite straightforward in spite of needing to use a few different accounts/bonds/savings certificates to make up the necessary amount. 

@SoozyJ22 Thanks for this. Did those savings institutions all write back confirming the payments were made, or did you need to phone their Bereavement Teams to ask?

SoozyJ22

@JamesRobinson48 All wrote back to me confirming, though I never actually received the letter sent by Monmouthshire (or the reprint they offered to send when I called them). I knew Monmouthshire had paid as I had a letter from HMRC confirming their calculation and the amounts paid on account so wasn't too worried. 

lake888

Just wondering at later age, would it be sensible to convert all stocks & shares ISA into cash ISA and make life easier for the executor when I pass.