{"id":316486,"date":"2025-11-24T21:25:08","date_gmt":"2025-11-24T21:25:08","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/when-do-you-have-to-pay-inheritance-tax\/"},"modified":"2025-11-24T21:25:08","modified_gmt":"2025-11-24T21:25:08","slug":"when-do-you-have-to-pay-inheritance-tax","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=316486","title":{"rendered":"When Do You Have to Pay Inheritance Tax?"},"content":{"rendered":"


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Planning for the future or dealing with the estate of a loved one can be an emotional and overwhelming process. One of the key financial questions families often ask is: When do you have to pay Inheritance Tax? Understanding the rules around inheritance tax, including deadlines, thresholds, and exemptions, can make a difficult time less stressful, and already having a plan in place elevates. This article offers a clear and practical overview of what inheritance tax is, when it must be paid, some advice from our experts and explains how planning ahead can make the process easier for everyone involved.\u00a0<\/span><\/p>\n

What is Inheritance Tax? A Simple Explanation<\/span><\/h2>\n

Inheritance Tax (IHT) is a tax applied to the estate of someone who has passed away. An estate includes everything a person owns, such as property, money, investments, and possessions.<\/span><\/p>\n

The standard rate of inheritance tax is 40%, and it is usually charged on the value of the estate above the applicable thresholds. While that may sound daunting, not every estate will owe IHT, thanks to allowances and reliefs.<\/span><\/p>\n

At <\/span>Kirkwood Wilson<\/span><\/a>, we often advise clients to view inheritance tax not simply as a burden but as a key area where professional planning can reduce stress and save money for beneficiaries.<\/span><\/p>\n

The Key Question: When Does Inheritance Tax Need to Be Paid?<\/span><\/h2>\n

Inheritance tax must be paid by the end of the sixth month after the person\u2019s death. For example, if someone dies in January, the deadline for payment is 31 July of the same year. If the deadline is missed, HMRC charges interest on the outstanding amount, which can increase the estate\u2019s liabilities. Importantly, you\u2019ll need a payment reference number from HMRC before making any payment.<\/span><\/p>\n

Understanding exactly when IHT is due is vital for executors and families alike. Professional inheritance <\/span>tax advice <\/span><\/a>can help avoid costly mistakes during this time-sensitive process.<\/span><\/p>\n

Understanding the Inheritance Tax Thresholds (The Nil-Rate Bands)<\/span><\/h2>\n

The good news is that not every estate pays inheritance tax. The current Inheritance Tax threshold, known as the Nil-Rate Band (NRB), is \u00a3325,000 for the 2025\/26 tax year. Estates valued below this level are not liable for IHT.<\/span><\/p>\n

In addition, the Residence Nil-Rate Band (RNRB) offers a further allowance of \u00a3175,000 when a main residence is passed to direct descendants, such as children or grandchildren. Additionally, spouses and civil partners can combine allowances, and unused allowances can be transferred. This means that, in some cases, a couple could pass on up to \u00a31 million without incurring any inheritance tax.<\/span><\/p>\n

A note from our experts:\u00a0\u00a0<\/b><\/p>\n

\u201cAt Kirkwood Wilson, we stress the importance of understanding these allowances. Many families can legitimately reduce or even eliminate inheritance tax liabilities through careful inheritance tax planning,<\/span><\/i>\u201d Sarah Bennett, Accountant at Kirkwood Wilson.<\/span><\/p>\n

The Rules on Gifting: A Major Area of Confusion<\/span><\/h2>\n

Another common question we hear is about the inheritance tax gift rules. Gifts can be a smart way to reduce the value of your estate, but the rules are not always straightforward.<\/span><\/p>\n