HMRC is set to increase their interest rate charged on late Inheritance Tax (IHT) payments to 7.5% per annum today, July 11th. As the HMRC interest rate tracks the Bank of England base rate, for many years HMRC’s interest rate was relatively low, but with recent interest rate increases, the HMRC rate is now high enough that accrued interest could significantly increase the overall amount of IHT an estate has to pay.
Interest starts to accrue from the end of the sixth month after the date of death, so it is important that executors not delay administering estates to enable the tax to be paid as soon as is practical.
The payment of IHT need not be as painful as some executors might imagine, as payments can often be made by instalments, or paid directly from the deceased’s bank accounts. Our Private Client Team can assist executors with the preparation and submission of IHT returns, liaising with HMRC and the deceased’s banks over payment arrangements, and advise on how to administer an estate properly and efficiently.