Paying IHT Before Probate: The Direct Payment Scheme Explained

The Chicken-and-Egg Problem

The legal position is clear but frustrating:

• HMRC will not issue an IHT421 clearance certificate (needed for probate) until IHT is paid or a payment arrangement is in place.
• The Probate Registry will not issue a Grant of Probate until the IHT position is confirmed.
• Banks and other institutions will not release estate funds to the executor without a Grant of Probate.

The Direct Payment Scheme breaks this loop by allowing the bank to pay HMRC directly from the deceased's account, without requiring probate first.

How the Direct Payment Scheme Works

1. Obtain IHT reference number: Apply to HMRC for an IHT reference number before completing IHT400. You will need this on the payment form.
2. Complete IHT400: File your Inheritance Tax account with HMRC. Calculate the IHT due. See our IHT400 form guide.
3. Complete form IHT423: This is the Direct Payment Scheme form. Fill in the details of the bank account from which payment is to be drawn. You need a separate IHT423 for each bank account you wish to draw from.
4. Send IHT423 to the bank (not HMRC): Send the completed IHT423 directly to the deceased's bank or building society, not to HMRC. Include a certified copy of the death certificate. The bank will then transfer the funds directly to HMRC.
5. HMRC confirms payment: Once HMRC receives the payment, they will issue the IHT421 confirmation. This can then be included with your probate application.
6. Apply for probate: With the IHT421 received, you can now complete and submit your probate application (PA1P or PA1A). See our guide to PA1P vs PA1A probate application forms.

Which Banks Participate in the DPS?

The following banks and building societies participate in the Direct Payment Scheme (this list may change — always confirm with the individual institution):

• Barclays Bank
• HSBC
• Lloyds Banking Group (including Halifax and Bank of Scotland)
• NatWest (including Royal Bank of Scotland)
• Santander
• Virgin Money (formerly Clydesdale Bank)
• Nationwide Building Society
• Yorkshire Building Society
• Skipton Building Society

Some smaller banks and building societies do not participate — if the deceased banked with a non-participating institution, alternative payment methods include personal cheque, bank transfer from your own funds (which you recoup once probate is granted), or borrowing from another beneficiary.

Paying IHT on Property (Instalments)

IHT on certain assets — most importantly, land and property — can be paid by 10 annual instalments rather than in full upfront. This can significantly ease the cash flow burden if the estate lacks liquid assets.

Key points on property instalments:

• The first instalment is due 6 months after the date of death (same deadline as the full IHT payment).
• Interest is charged on outstanding instalments from the 6-month deadline — so the total cost increases with each year.
• If the property is sold, all remaining instalments become due immediately.
• Instalment option also applies to business and agricultural property in some circumstances.

For detail on how delays and interest interact, see our guide to probate delays and IHT interest charges.

What if the Estate Cannot Pay the IHT Due?

If the estate genuinely cannot raise the funds to pay IHT (for example, all assets are illiquid, such as a property with no mortgage and no savings), you have several options:

• Executor loan: The executor (or a beneficiary) personally lends the estate the funds to pay IHT, repaid from estate assets once probate is granted.
• Bridging loan: Some lenders offer probate bridging loans specifically for this situation — the loan is secured against the estate and repaid once assets are realised.
• Instalment option: Use instalments for property IHT (see above) and pay other IHT from any available liquid assets.

For the overall IHT position and reliefs that might reduce the bill, see our inheritance tax guide for 2026–27. For the full probate process, see our complete UK probate guide. Use our free estate administration tool to build a personalised task list.

Related Guides

• IHT400 Form Guide
• Executor First Steps
• Valuing a Property for Probate
• Applying for Probate
• Estate Administration Checklist