Inheritance tax interest

Duvaljones

Hi all

We'll be making our 2nd IHT instalment at the end of March. Then, hopefully by the end of April(ish) the house sale will go through and we'll be able to pay off the remaining £150kish.

My question is about how the interest is applied. We'll be paying around £15k interest on top of the instalment amount in March, which is the interest from 1/4/25 - 31/3/26. If we pay off the whole lot around mid-April, i assume that means the remainder of the IHT plus interest from 1/4/26 up to the time of payment. Is that right?

I've read and re-read the HMRC pages but, being HMRC, it's not that clear for the laymen of the world.

Any guidance or just clarification would be gratefully received.

Thank you

SiliconChip

Somebody is likely to know the answer, but you might find it yourself if you search for the HMRC Inheritance Tax manuals rather than rely on web pages, which often simplify things too much and are sometimes plain wrong.

DRS1

You have probably read this page already but is the calculator any use?

Pay your Inheritance Tax bill: In yearly instalments - GOV.UK

probate_slave

Yes, you have understood correctly. The arithmetic is straightforward and covered in the IHT400 helpsheet "Working out the interest" halfway down this page:

https://www.gov.uk/government/publications/inheritance-tax-inheritance-tax-account-iht400

Interest rates are given here if you want to check the calculator(HMRC curiously uses 366 rather than 365 as denominator, which favours the taxpayer):

https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds-and-interest-rates/inheritance-tax-thresholds-and-interest-rates#inheritance-tax-interest-rates-from-october-1988

I noticed that you queried penalties for late payment in your original post before editing. These don't exist for IHT, the interest rate is punitive enough. So if you wanted to delay paying the 2nd instalment (plus interest) entirely until the house sells at the end of April, say, I estimate this would only cost you an additional £100 of interest. This is based on an assumed annual instalment of £15k.

Duvaljones

https://forums.moneysavingexpert.com/discussion/comment/81902659#Comment_81902659

thank you, that’s very informative. It looked like we’d miss it but a family member has stepped up.

SavvySaver2026

Sorry you're dealing with this — it's stressful. HMRC does charge interest on late IHT payments but they're generally reasonable if you contact them proactively. Call the IHT helpline (0300 123 1072) and explain the situation with the delayed house sale. They've heard it a thousand times — a lot of estates are property-heavy and cash-poor. They may be able to note the account and avoid penalties while the sale completes.