Inheritance Tax UK: Britons may face charges if they fail to pay a bill on time - act now
Inheritance tax is payable on the estate of someone who has passed away, and is currently set at 40 percent. While the tax is not well-liked by many Britons, it is one which must be met, and by a particular point in time. The government website explains: “You may pay Inheritance Tax by the end of the sixth month after the person died.
“Once you have these in place, it can make a significant difference for your family or those dealing with your estate.
“If they have a document which has all of their wishes and information, it can make the process a lot easier, as long as you have it in an accessible format.”
For those who need longer to meet an Inheritance Tax bill, for example the 10 years Mr Rushton referenced, IHT can be met in instalments.
People must, however, state they wish to take this approach when filling out the documentation associated with a bill.
Mr Rushton added: “Alternatively, you might wish to appoint professional executors and trustees to deal with your affairs.
“These are people who are well versed in the whole process, and might be able to get things done in a more systematic way should you be worried about deadlines or penalties.”
However, while the six month deadline is one which has some level of flexibility, there are other issues to bear in mind when it comes to finances.
Mr Rushton explained: “Interest will still remain payable on any outstanding balance after the total bill is due.
“Six months after the date of death, this will have to be met by the person who is dealing with the estate.
“The rate of interest in this circumstances has remained at 2.75 percent since 2016.”
Overall, though, Britons are likely to wish to avoid interest payments, as these could chip away at what remains of their estate to share with their beneficiaries.
As a result, Mr Rushton concluded by giving advice to those in a challenging position with their IHT bill.
He said: “I would recommend individuals check with their bank and investment managers whether they would be willing to release funds early.
“They can check how much would be available in order to pay the IHT bill prior to Grant of Probate being obtained by executors.
“Many won’t be willing to release funds, and therefore planning ahead to make sure there is sufficient liquidity will really help executors.
“This can also help in avoiding what could be a significant amount of interest being paid against the estate before being passed to loved ones.”
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