204 Part 3
5 The bank or building society will transfer the money to HMRC.
6 Once HMRC receives notication of payment, the payment and your
form IHT400 inheritance tax account will be linked. If all is in order,
HMRC will stamp and return form IHT421 Probate Summary (or form
C1 Conrmation in Scotland) to you.
Payments by instalment
It may be possible to pay the inheritance tax over ten equal annual instal-
ments, but it depends on the type of asset. The instalments would start on
the normal due date (six months after the month of death). Assets quali-
fying for the instalment option include:
Land and buildings anywhere in the world.
Quoted shares or securities where the donor has a controlling interest
(at least a half shareholding) in the company.
Unquoted shares or securities where the donor has a controlling
interest (at least a half shareholding) in the company and some
minority holdings in unquoted shares.
An unincorporated business (sole tradership) or a share in a
The personal representatives indicate on the form IHT400 Inheritance Tax
Account that they wish to pay in instalments.
Good reasons for paying any tax by instalments are often down to cash-
ow. Sometimes, the beneciaries are able to keep the assets themselves
when they benet from an estate but there could be inheritance tax due on
these assets that has to be paid, which might force the sale of these assets.
Therefore, if there is the option of paying the IHT by instalments, then this
often gives the chance for the beneciary to keep the asset but still pay the
IHT within the allowed timescale.
Another good reason for the IHT on some assets to be paid by instalments
is so that the personal representatives can pay the immediate IHT due with
the funds available so that the grant of probate may be obtained. Once this
has been obtained, then more of the assets can be released for sale as neces-
sary and if chosen, the full amount of IHT can be paid.
Opting to pay by instalments initially gives the personal representatives a
little more scope and time to sort out the administration.