Inheritance tax (IHT) has to be paid if your estate is worth over a certain amount when you pass away. At Narrative Wealth, we can talk you through the details and help you work out whether IHT will be payable and the deadline for payment.
When is inheritance tax (IHT) payable?
If your estate is worth more than £325,000 (known as the nil rate band) when you pass away, it could be subject to inheritance tax (IHT) . This means your beneficiaries will have to pay 40% on the amount above the nil rate band (NRB) threshold. Having said that, there are some allowances: more about those later.
IHT must be paid within six months of the month in which you die. So, if you passed away on 5th February, the deadline would be 31st August. Although it sounds like a reasonable amount of time, the deadline can come around quickly, particularly if your beneficiaries have to pull together details about the estate and calculate the amount of tax that’s due. If payment is made after the deadline, HMRC will charge interest.
Who is responsible for paying IHT?
The legal duty to settle the IHT falls to your estate’s executor (or administrator). This person is responsible for making sure that the correct amount is paid to HMRC by the official deadline.
How does inheritance tax work during probate?
Probate is separate from IHT but related. It is the legal authority to deal with the estate, granted by the Probate Registry once the paperwork is in order. If there is a will, the executors apply for a grant of probate. If there is no will, the closest relatives apply for letters of administration. In both cases, banks, the Land Registry and share registrars will usually want to see the grant before they release funds or transfer assets. The inheritance tax position has to be settled, or at least declared, as part of that application.
Understanding the distinction between probate and inheritance tax is essential. Probate is about legal authority and estate administration, while inheritance tax concerns the financial liabilities due to HMRC.
How property can affect inheritance tax?
Inheritance tax receipts in the United Kingdom amounted to almost 8.5 billion British pounds in 2025/26 , compared with 7.5 billion pounds in the previous financial year. One reason for this increase is that the value of property has boomed, especially in cities like London. This has pushed more and more estates over the IHT NRB threshold. However, there is a second allowance called the Residence Nil Rate Band (RNRB) which can make all the difference. RNRB is a further £175,000 allowance that can be applied if you pass your main property onto your children or grandchildren. This raises the threshold to £500,000.
Next steps
If you want to know more about inheritance tax, contact our experts at Narrative Wealth, based in Wimbledon, London. Get in touch to find out what your heirs can expect to pay.