How to Pay Inheritance Tax Before Probate is Granted (Direct Payment Scheme)

How to pay inheritance tax before probate is granted is one of the most frequently asked questions families face in the weeks after a bereavement. The problem is a genuine legal paradox: HMRC requires inheritance tax to be paid before the Probate Registry will issue a grant of probate, yet most of the deceased’s assets are frozen and inaccessible without that grant. The executor may want to pay the tax from the estate’s bank accounts but cannot withdraw funds without the grant. Banks will not release money without authority. HMRC will not issue a clearance certificate until the tax is paid. And the Probate Registry will not issue the grant until the tax is paid or an arrangement to pay is in place.

Fortunately, there are practical solutions. The most widely used is the Direct Payment Scheme (DPS), which allows participating banks and building societies to transfer money directly from the deceased’s accounts to HMRC without the executor needing a grant first. For tax attributable to property or certain other assets, HMRC also permits payment in annual instalments over ten years. And where executors have personal funds or access to a commercial probate loan, they may pay HMRC directly and recoup the amount from the estate once the grant issues.

This guide explains each option in detail so that executors understand their choices and can move through the probate process without unnecessary delays. For the wider picture of probate costs and timelines, see our guides to probate costs and the probate process.

Why Must Inheritance Tax Be Paid Before Probate?

The requirement to pay inheritance tax before receiving a grant of probate flows from s.256 Inheritance Tax Act 1984 (IHTA 1984), which gives the Probate Registry authority to refuse to issue a grant until it receives a receipt from HMRC (known as an IHT421) confirming that the tax has been paid or that no tax is due. The underlying rationale is that the grant of probate — the legal authority to deal with the estate — should not be given to executors until the State’s first claim (its tax debt) has been secured.

In practice, the IHT421 is now sent electronically by HMRC directly to the Probate Registry once the IHT400 is processed, so executors do not need to physically lodge it themselves. However, the principle remains: HMRC must confirm payment (or that the instalments arrangement is in place, or that the estate is excepted from tax) before the probate application can proceed. For the approximately six months between death and the IHT due date, interest on unpaid inheritance tax accrues at the current HMRC late payment rate, which in 2026 is linked to the Bank of England base rate plus a margin. HMRC provides an overview of paying inheritance tax on GOV.UK.

What Is the Direct Payment Scheme?

The Direct Payment Scheme (DPS) is an arrangement under which participating banks, building societies, and National Savings and Investments (NS&I) will transfer money from the deceased’s accounts directly to HMRC to pay an inheritance tax liability, without waiting for a grant of probate. The executor must complete form IHT423 for each institution from which funds are to be released and submit the form to HMRC along with the IHT400. HMRC then contacts the institution directly to arrange the transfer.

The DPS is available for inheritance tax payments only — it cannot be used for income tax or other liabilities. The amount transferred must correspond to the IHT charge as calculated on the IHT400 and accepted by HMRC. Institutions will not release funds speculatively; the amount must be precise and agreed. If the account does not hold enough funds to cover the full liability, the executor must fund the shortfall from another source.

Which Banks and Building Societies Participate in the DPS?

Most major UK banks and building societies participate in the Direct Payment Scheme, including the major high street banks, NS&I (for Premium Bonds, savings certificates, and investment accounts), and most building societies. The full list is maintained by HMRC and updated periodically. Before assuming a particular institution will participate, executors should confirm directly with the bank, particularly for smaller or more specialist institutions.

NS&I accounts are particularly useful because the institution routinely cooperates with DPS requests and holds funds that are easy to trace and quantify. Where the deceased held Premium Bonds, these can be encashed via NS&I to fund an inheritance tax payment even before probate, making them a common first port of call for executors facing an IHT liability.

Paying IHT on Property: The Instalment Option

Where part of the inheritance tax is attributable to property — the deceased’s home, investment properties, or certain business and agricultural assets — HMRC allows the tax on those assets to be paid in ten equal annual instalments rather than in full before the grant issues. The first instalment must be paid before or at the time the IHT400 is submitted and the probate application is made. Subsequent instalments fall due annually on the anniversary of that first payment.

Interest accrues on all outstanding instalment payments from the normal due date (six months after the end of the month of death). If the property is sold before all instalments are paid, the outstanding balance becomes immediately payable in full. The instalment option does not reduce the tax — it only spreads the payment — so the total amount paid (including interest) will be higher than a lump sum payment made promptly. Executors must weigh the cash flow benefit against the additional interest cost. For advice on how the administration of an estate unfolds around these payments, see our inheritance tax guide.

Using a Probate Loan to Fund IHT

Where neither the DPS nor personal funds can cover the inheritance tax liability, executors may consider a commercial probate loan (also known as an estate loan or IHT bridging loan). These are short-term loans secured against the estate’s assets — most commonly the property — that are repaid from the estate once the grant issues and the assets can be sold or encashed. Interest rates on probate loans vary, and the arrangement fee can be significant, so this option should be compared carefully against the cost of HMRC interest on the instalment plan.

Some lenders specialise in probate loans and can process applications relatively quickly, making them a viable solution where the estate is illiquid and the DPS cannot cover the full liability. The executor should take independent financial advice before entering into any borrowing arrangement in their capacity as executor.

After the Tax Is Paid: IHT Clearance

Once HMRC has processed the IHT400 and confirmed that the tax has been paid, they issue a clearance letter confirming that they have no further claim against the estate for inheritance tax. This clearance is separate from the IHT421 (which is sent to the Probate Registry to unlock the grant). Executors should obtain IHT clearance before distributing the estate to beneficiaries, because if HMRC subsequently raises an additional assessment — for example, following a revision to a property valuation — the executor may be personally liable for the shortfall if assets have already been distributed. For more on executor liability, see our guide to executor duties.

Written by Simon Jenkins, SRA 167489, Solicitor at Curtis Legal Limited (SRA 450129). For help navigating the inheritance tax payment process, call freephone 0800 214 216 or request a same-day callback.