What This Guide Covers
- Why Inheritance Tax is due before you even have the Grant of Probate
- How the Direct Payment Scheme lets a bank pay HMRC directly
- What the scheme does not cover, and what still falls to you personally
- Your options if the estate cannot cover the bill outright
One of the most stressful moments for an executor arrives early, and it catches almost everyone by surprise: HM Revenue & Customs expects Inheritance Tax to be paid before the Grant of Probate is issued — while the very bank accounts you need to pay it from are frozen. If you’re dealing with this right now, you’re not doing anything wrong. It’s how the system works. Here’s how to get through it.
Why you’re being asked to pay before you have any legal authority
Inheritance Tax is due at the end of the sixth month after the month in which the person died. If someone died in January, the IHT deadline is 31 July — regardless of whether probate has been granted by then.
The problem is timing. Banks and building societies freeze a deceased person’s accounts as soon as they’re notified of the death, and normally won’t release funds until you can show them the Grant of Probate. But you can’t get the Grant from the Probate Registry until you’ve paid (or arranged to pay) any Inheritance Tax due. Families understandably describe this as a chicken-and-egg problem, because that’s exactly what it is.
The Direct Payment Scheme: the way most estates solve this
HMRC’s Direct Payment Scheme (DPS) exists specifically to break this deadlock. It allows the deceased’s own bank, building society, or National Savings & Investments account to pay HMRC directly — without you needing the Grant of Probate first.
In practice, this is what it involves:
You complete form IHT423 — one for each bank or institution holding funds you want to use. This goes alongside your main Inheritance Tax return (IHT400) to HMRC.
The bank pays HMRC directly, transferring the agreed amount straight from the deceased’s account. You never take personal receipt of the money, and you don’t need to have the Grant in hand for this step.
Most major UK banks, building societies, and NS&I participate in the scheme, though each institution has its own internal process and turnaround time, so it’s worth starting this conversation with the bank as early as possible — not in the week the deadline falls due.
What the Direct Payment Scheme does not cover
This is where families often get caught out a second time. The DPS pays the Inheritance Tax itself, plus any interest that has accrued on it. It does not cover the probate application fee, which rose from £300 to £526 per application from 13 July 2026. That fee still has to come from somewhere the executor can personally access, even while the estate’s main accounts are tied up.
If the estate doesn’t have enough liquid funds to cover the bill
Not every estate has enough sitting in bank accounts to clear the Inheritance Tax due, particularly where most of the value sits in the property itself. If that’s your situation, executors typically have three realistic routes:
Instalment payment on property. HMRC allows Inheritance Tax attributable to land and buildings to be paid in equal annual instalments over up to 10 years, rather than as a single lump sum. This doesn’t remove the liability, and interest still accrues on the outstanding balance, but it can relieve immediate pressure while a property sale is arranged properly.
A specialist probate or estate administration loan. Some lenders offer short-term finance secured against the estate specifically to cover an IHT bill before assets can be liquidated. These are commercial products from third-party lenders, generally outside standard FCA consumer credit regulation, so it’s worth taking independent advice on the true cost before committing — interest can accumulate quickly on top of what you already owe HMRC.
Selling the property itself to release funds. For many estates, the property is the estate’s only substantial asset, which means the fastest way to clear the tax bill — and stop interest accruing — is completing a sale as early in the process as the law allows.
The cost of waiting
HMRC currently charges 7.75% interest on Inheritance Tax paid late (the rate was reduced from a higher level in January 2026, but it remains a real cost). On a six-figure tax bill, that interest adds up by the month, not the year. This is one of the main reasons we encourage executors not to wait for the Grant of Probate to be fully finalised before starting the sale process on an inherited property — with the right buyer, a sale can move in parallel with probate, rather than only starting once it is complete.
The Bottom Line
You do not need to solve inheritance tax, probate, and a property sale all on your own, and you don’t need to guess which route fits your situation. We work with executors every day who are dealing with exactly this timing squeeze, and part of what we do is help you understand your options — including a free, no-obligation consultation with a probate solicitor — before you commit to any one path.