What Happens If You Miss the Inheritance Tax Deadline?
Inheritance Tax is one of the most administratively complex areas of UK tax. Executors must file returns and pay tax by set deadlines - missing them triggers automatic penalties and interest from HMRC. With rising estate values pushing more estates into IHT territory, late filing is an increasingly common and costly problem.
- IHT must be paid within 6 months of the end of the month of death. Interest accrues from this date on any unpaid amount.
- The IHT400 return must be filed within 12 months. Late filing triggers automatic fixed penalties starting at 100 GBP.
- Penalties escalate to 200 GBP then tax-geared penalties of up to 100% of unpaid tax for prolonged delays.
- You can appeal penalties with a reasonable excuse - delays in obtaining probate or complex valuations can qualify.
IHT Payment and Filing Deadlines
Payment deadline: IHT must be paid within 6 months of the end of the month of death. Filing deadline: the IHT400 must be submitted within 12 months. Interest accrues on unpaid tax from the payment deadline, even before the return is filed.
The Penalty Structure
Automatic penalties for late IHT400 returns: up to 6 months late - fixed 100 GBP penalty; 6 to 12 months late - additional 200 GBP; more than 12 months late - tax-geared penalties of 5% to 100% of unpaid tax depending on whether the failure is considered deliberate.
Interest on Late Payment
HMRC charges interest on IHT paid after the 6-month deadline. The late payment interest rate is reviewed quarterly and published at gov.uk/government/collections/rates-and-allowances-inheritance-tax.
How to Appeal
Appeal within 30 days of the penalty notice. Reasonable excuse can include serious illness, delays obtaining probate due to contested assets, HMRC error, or difficulty valuing overseas assets. If HMRC rejects the appeal, escalate to the First-tier Tax Tribunal.
Instalment Option
HMRC allows IHT on certain assets - land, buildings, businesses and unlisted shares - to be paid in annual instalments over 10 years. Instalment payments still accrue interest if paid late.
Frequently Asked Questions
What is the IHT payment deadline?
IHT must be paid within 6 months of the end of the month of death. Interest accrues from this date on any unpaid amount.
Can I get an extension on the IHT filing deadline?
HMRC does not grant automatic extensions but considers reasonable excuse appeals after the fact. If the deadline will be missed, contact HMRC proactively on 0300 123 1072 - this can support a later appeal.
What if the estate lacks cash to pay IHT?
HMRC allows instalment payments over 10 years for qualifying assets. The Direct Payment Scheme also allows payment from the deceased person bank accounts before probate is granted.
Does interest apply to penalties as well as tax?
Interest applies to the unpaid tax, not to the penalties themselves. Both accrue until the IHT liability is settled, compounding the total amount owed with delays.
