When can you apply for the Inheritance Tax to be postponed?

Knowing if and when you can get postponed Inheritance Tax (IHT) status can help avoid sales at a bad price. This guide explains when you can delay payment, how to request it, what risks to consider, and what interest may apply. 

Criteria for postponement

You can apply to postpone Inheritance Tax if the estate’s assets are not easily accessible before probate, especially when property, shares, investment bonds, or government stock need to be sold. HMRC allows delays in some situations, including: 

• The estate’s funds are locked up in assets that cannot be released quickly.
• You have submitted the IHT400 (or exemption form) and need more time before payment.
• You meet the requirements for a Grant on Credit because you cannot raise funds before probate. 

Delaying payment is not automatic. HMRC will assess whether the estate genuinely needs time to raise funds and whether you have already paid all you can reasonably afford before probate. 

How to apply 

To ask for a postponement: 

1. Complete and send the relevant IHT account (for example, IHT400) to HMRC.
2. Write a formal letter explaining why the estate lacks accessible funds, and state how much you can pay now.
3. Label your letter with “Grant on Credit” and include the IHT reference number.
4. Clearly state the date by which you expect to pay the rest, normally the date of the property sale or Grant of Probate.
5. Send your documents and letter to HMRC’s Inheritance Tax team at BX9 1HT. 

If HMRC agrees, you must sign a legally binding undertaking to pay the outstanding tax by the agreed date. HMRC may register a notice against any land in the estate to protect its interest until tax is settled. 

Risks of postponing payment 

Opting to postpone IHT comes with several considerations: 

• HMRC requires proof that at least part of the tax was paid or made available.
• If no clear payment plan is provided, HMRC may refuse the postponement.
• You may face pressure to sell property quickly, or at a lower price, to satisfy the tax debt.
• The notice placed on the property remains until full payment is made, which may affect a sale or refinancing.

Failure to adhere to the terms of the payment undertaken may lead to penalties or enforcement action. 

Interest on postponed payments 

Even when postponement is approved, HMRC charges interest from the original payment deadline until full repayment is made. This accrual is applied daily. Interest accrues whether or not the Grant of Probate is issued, so timing matters. If assets remain unsold for an extended period, the cost of postponement can grow significantly. Paying as much as possible up front reduces the total interest owed. 

In summary 

In summary, postponed Inheritance Tax can be arranged when estate funds are tied up in illiquid assets and immediate payment isn’t feasible. You must submit tax forms, explain your position to HMRC, and commit in writing to a repayment schedule. While postponement offers breathing space, interest charges and procedural risk mean it should only be used when necessary and with clear planning.