Hello I may assist
Where an estate is worth more than £325000, then tax is paid at a rate of 40% on anything above that. This must be paid within 6 months of it becoming due, there are exceptions.
Lawyers acting for an estate would want to ensure funds are available. If there ate large bank accounts, the pay can come from there. If however, it is property, then either money would need to be paid up, or assets sold to cover the cost.
Pay Inheritance Tax in Instalments
Another option that can sometimes assist the Executor is them choosing to pay the Inheritance Tax in annual instalments, over 10 years. Please note this option is only available where the Inheritance Tax is chargeable on:
- Business interests
- Certain holdings or shares (generally either company shareholdings that give the owner control of the company, or a large holding of shares in a company that is not listed on the stock exchange).
If you choose to pay in instalments, interest will not be charged on the first instalment unless you miss the payment deadline. For each later instalment, interest will be charged on the whole unpaid portion of Inheritance Tax for the year.
It is important to note that if you decide to go for the instalment option, the Inheritance Tax should be paid as soon as possible once the asset on which this option applies has been sold.
Apply for an Executor’s Loan
As an Executor, you are not liable to pay Inheritance Tax from your own assets. If the two options above do still not enable you to pay the inheritance tax, you can apply for an “Executor’s loan”. Generally banks offer these loans at their standard loan rates.
If you will need an Executor’s loan you should contact the bank you intend to obtain this from as soon as possible to find out their requirements. You will need to be able to provide them with details of the assets and liabilities (debts) of the Estate. You will also need to repay the loan as soon as possible once you have obtained access to the Estate funds, so that the Estate does not continue to be charged interest on the loan.