Paying IHT Flashcards
(8 cards)
what methods can be used to fund IHT?
Paying IHT can be challenging because asset holders often won’t release funds until they have seen the GOR. Possible options:
o Direct payment scheme
o Life assurance
o Use assets which can be released without a grant
o Loans from Bs
o Bank loans
o National savings and government stock
o Heritage assets in lieu of tax
o Grant on credit
explain how a direct payment scheme operates and the disadvantages
IHT is paid directly from D’s bank to HMRC
PRs provide any identification required by the bank
PRs complete IHT423 for each bank + send this to HMRC with IHT400
Voluntary - not all banks participate
Can be slow. Not suitable in urgent cases.
explain life assurance
if D had a life assurance policy payable to the estate, the insurer may agree to pay it to HMRC
explain when a bank may give a loan and a pro and con of this option
banks may lend against the estate if the PRs/solicitor will give an undertaking to repay
con: loans incurs fees
pro: interest but can qualify for income tax relief
explain heritage assets in lieu of tax
valuable historic or artistic property can be offered to HMRC to settle IHT. Must be approved by the SoS.
explain grant on credit
HMRC can allow probate to be issued on credit where PRs can prove paying IHT upfront is impossible (exceptional cases)
when must IHT for non-instalment property be paid? When does interest start to accrue?
IHT must be paid in full within 6 months after the end of the month in with D died (i.e. D died 10 Jan, IHT to be paid by 31 July)
Interest is charged on late payments
GOR will not be issued until this has been paid
when must IHT for instalment option property be paid? When does interest start to accrue?
Not paying in instalments = same rule as above
Paying in instalments = 1st payment due within 6 months of death (and must be made before GOR issued)
