In the UK, Inheritance Tax (IHT) must generally be paid by the end of the sixth month after the person’s death. For example, if someone dies in April, the tax is due by October 31st. Interest is charged on late payments, and although the full amount is due by this date, payment on certain assets (like land) can be spread over 10 years.
The federal estate tax return, Form 706, is due nine months from the decedent's date of death and can be extended an additional six months.
The 7 year rule
No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.
This means that if you inherit a property any time between 1st September and 31st August, you must pay Inheritance or Capital Acquisitions Tax by the 31st October. For example, if you inherited a property on 3rd September 2023, you would have had to pay CAT by 31st October 2024.
Consequences of Late Payment
Failing to pay Inheritance Tax on time can result in significant penalties. HMRC charges interest on the outstanding tax amount, which can quickly accumulate and increase the overall financial burden on the estate.
You might have to pay IRS penalties and interest if you file your federal income tax return after the April deadline, your due date isn't extended, and you end up with a tax bill. First, the IRS charges a 5% penalty per month on any tax due if your return is filed late. The penalty is capped at 25% of the tax owed.
HMRC can request access to bank statements to identify income that may indicate hidden assets such as undeclared investments, property, or high levels of foreign currency transactions. Complex estate structures or last-minute movements of assets can attract attention.
Inheritance Tax must be paid by the end of the sixth month after the person's death. If it's not paid by then, HMRC will start charging interest. The executors can choose to pay the tax on certain assets, such as property, by instalment over ten years. But the outstanding amount of tax will still get charged interest.
Federal Taxes
For 2025, the Congress sets the federal estate tax exemption at $13.99 million per individual, or $27.98 million for married couples. This means estates valued below those thresholds owe no federal estate tax.
Overview. Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who's died. There's normally no Inheritance Tax to pay if either: the value of your estate is below the £325,000 threshold.
2. Changes to Gifting & Inheritance Rules. Annual Gift Tax Exemption Increase: You can now gift up to $19,000 per person per year without triggering taxes. A married couple can give $38,000 to each child or grandchild tax-free.
Timing is therefore everything! It is the executor's job after a person dies to disclose all lifetime gifts to HMRC, particularly all those made in the last 7 years prior to death. Executors are obliged to research all lifetime gifts made.
IHT may have to be paid on the estate if it's worth more than the tax-free threshold of £325,000. This means that the first £325,000 of your estate is tax-free – the 40% tax only applies to any assets over this threshold.
If you wish to bring an Inheritance Act claim it must be issued at court within 6 months of the grant of probate (or the grant of letters of administration) in the deceased's estate.
Give more money away
Lifetime gifting is a straightforward way to begin reducing your IHT bill. By gifting money during lifetime, that would have been part of an inheritance anyway, you reduce the size of your estate so that there is smaller amount subject to IHT on your death.
Charity exemption
Like the spousal exemption, assets passing to charity on death are exempt from inheritance tax. As such, if an entire estate passes to charity, there will be no inheritance tax due.
By waiting ten months, the executor has the chance to see whether anyone is going to raise an objection. There are six months from the date of the Grant of Probate in which to commence a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Then a further four months in which to serve the claim.
It varies from person to person. Inheriting $100,000 or more is often considered sizable. This sum of money is significant, and it's essential to manage it wisely to meet your financial goals. A wealth manager or financial advisor can help you navigate how to approach this.
If you disclaim your inheritance, it will usually go to the next person who's entitled under the intestacy rules. If you claim benefits, your inheritance might change what benefits you're entitled to. You can check how your benefits might change using a benefits calculator. You can also talk to an adviser.
In 2025, the first $13,990,000 of an estate is exempt from federal estate taxes, up from $13,610,000 in 2024. Estate taxes are based on the size of the estate. It's a progressive tax, just like the federal income tax system. This means that the larger the estate, the higher the tax rate it is subject to.
If HMRC writes to you stating that they are doing so under “Code of Practice 9” they can go back up to 20 years.