Preparing to cough up the inheritance tax

Once you have come up with an IHT figure that you and the tax inspector are happy with, it's time to pay what's due.

HMRC issues calculations or a notice of determination if IHT is due, which sounds very ominous!

Preparing to cough up the inheritance tax

If you disagree with the IHT figure, you can lodge an appeal against a notice of determination within 30 days of it being issued, otherwise the notice is final. Appeals are made to special independent HMRC commissioners and can only be based on a point of tax law. Under exceptional circumstances an appeal could be taken to the High Court, but that could be ruinously expensive.

Ask HMRC for three copies of IHT 30, an application to be discharged from further IHT. All the executors or administrators need to sign the three copies of IHT 30 – keep one for your records and return the other two to HMRC.

The executors or administrators armed with grant of probate or letters of administration can now start gathering in and distributing the estate. Phew!

Preparing to cough up the inheritance tax

If you fail to pay inheritance tax by the due date then HMRC starts charging interest on what's owed. Interest starts to apply automatically seven months after the deceased's death. At present, the HMRC charges 5 per cent interest a year.

Preparing to cough up the inheritance tax

If you sell any of the deceased's share investments at a loss within three years of the date of death, you can claim relief against IHT. Likewise, if land or buildings are sold at a loss within four years of the death, you can claim IHT relief. Ask your local tax office for more information.

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