Probate Delays and IHT Interest: What Executors Need to Know

Inheritance tax must be paid within 6 months of death, but probate often takes longer. HMRC charges 8.75% interest on unpaid IHT, making delays expensive. This guide explains your options for paying IHT before probate and avoiding unnecessary interest charges.

Average reading time: 10 minutes • Updated: November 2025

8.75% Interest Rate

From April 2025, HMRC charges 8.75% annual interest on unpaid inheritance tax (up from 7.25%). This is calculated as the Bank of England base rate plus 4%. On a £100,000 IHT bill, that's £8,750 per year in interest - or over £700 per month.

Quick Summary

Payment deadline: IHT must be paid within 6 months of the end of the month in which death occurred
Interest rate: 8.75% per annum on late payments (from April 2025)
Probate timeline: Average 9+ weeks, but can take months longer
The problem: You often can't access estate funds to pay IHT until you have probate
The solution: Direct Payment Scheme allows banks to pay HMRC before probate

The Probate and IHT Timing Problem

Executors face a frustrating catch-22 situation:

IHT must be paid within 6 months of the end of the month of death
You can't get probate until at least some IHT is paid (if IHT is due)
You can't access the deceased's money to pay IHT until you have probate
Probate can take 9+ weeks even for straightforward applications

This creates a situation where interest can accrue even when executors are doing everything correctly, simply because the system is slow.

Current Probate Timelines

As of late 2025, probate processing times are:

Application Type	Typical Timeline
Simple estates (no IHT)	4-8 weeks
Standard estates with IHT	9-12 weeks
Complex estates	16-20+ weeks
HMRC enquiries/valuations	6-12+ months

Delays Beyond Your Control

HMRC may open enquiries into estate valuations, particularly for property, business assets, or anything unusual. These investigations can take 6-12 months to resolve. Interest continues to accrue during this period, even though the executor cannot finalise the estate.

The Direct Payment Scheme

The Direct Payment Scheme (also called the "IHT Direct Payment Scheme") allows executors to arrange for banks and building societies to pay inheritance tax directly to HMRC from the deceased's accounts - before probate is granted.

How It Works

Complete form IHT423 (one form per bank/building society)
Send the form to each bank holding the deceased's money
The bank pays HMRC directly and provides you with confirmation
Use this confirmation when applying for probate

Which Banks Participate?

Most major UK banks and building societies participate in the scheme, including:

Barclays, HSBC, Lloyds, NatWest, Santander
Nationwide and other building societies
Most savings and investment providers

Note: Not all institutions participate, and some may have limits on the amount they'll release. Check with each institution directly.

Limitations

Only works for cash deposits - not investments, property, or other assets
Some banks may not release the full amount needed
Doesn't help if the deceased's main assets are property

Other Options for Paying IHT Before Probate

1. Pay from Your Own Funds

Executors can pay IHT from their own money (or borrowed money) and reimburse themselves from the estate later. This avoids interest charges but requires having access to significant funds.

2. Executor Loans

Some specialist lenders offer "executor loans" or "probate loans" specifically for this purpose. The estate repays the loan once probate is granted. Interest rates vary but are often lower than HMRC's 8.75% rate.

3. Instalment Option

For certain assets (property, land, business assets, shares), IHT can be paid in 10 annual instalments. Interest is usually charged on the outstanding balance, but for agricultural and business property, the instalments are interest-free.

4. National Savings

NS&I Premium Bonds and other National Savings products can usually be cashed in before probate to pay IHT.

Calculating Your IHT Deadline

IHT is due by the end of the 6th month after the month of death:

If Death Occurred In	IHT Due By
January	31 July
February	31 August
March	30 September
November	31 May

Interest Starts from 6 Months

You don't need to pay IHT immediately. The 6-month window gives you time to gather information, complete valuations, and arrange payment. Interest only starts accruing after this deadline passes.

What If You Can't Pay on Time?

If you genuinely cannot pay the full IHT by the deadline:

Pay what you can: Partial payment reduces the amount on which interest accrues
Use the instalment option: If available for the estate's assets
Contact HMRC: In exceptional circumstances, they may agree payment arrangements
Consider a loan: Executor loans may work out cheaper than HMRC interest

Tips for Executors

Start Early

Begin gathering financial information immediately
Request valuations for property and assets as soon as possible
Don't wait until you have complete information to start the IHT return

Use Estimates If Necessary

HMRC accepts estimated values on initial returns
It's better to pay estimated IHT and get a refund than to miss the deadline
You can correct values later when final figures are known

Keep Records

Document all steps taken and dates
Keep copies of all correspondence with HMRC, banks, and valuers
If delays are caused by third parties, having evidence may help

Key Takeaways

IHT must be paid within 6 months of the end of the month of death
HMRC charges 8.75% interest on late payments (from April 2025)
The Direct Payment Scheme lets banks pay HMRC before probate
Probate delays can cause interest to accrue even when you're doing everything right
Executor loans, personal funds, or the instalment option may help
Start the IHT process early and use estimates if necessary
For estates with property or complex assets, delays are common - plan accordingly

Need Help Navigating This?

Farra helps bereaved families track all the tasks involved in estate administration, including IHT deadlines. Our tools help ensure nothing gets missed and you stay on top of critical deadlines.