How to Pay Inheritance Tax Before Probate Is Granted

One of the most frustrating aspects of estate administration is a genuine catch-22 built into the system. HMRC requires you to pay at least some of the inheritance tax before they will issue the reference number (IHT421) needed to apply for probate. But the banks will not release estate funds without probate. And you cannot get probate without the IHT421. If this sounds circular, it is -- and it catches many executors off guard. This guide explains how the system is designed to be broken, and the practical steps to take.

Understanding the catch-22

The sequence of events for a taxable estate is:

1. You complete the IHT400 inheritance tax account and submit it to HMRC
2. HMRC require payment (or at least a substantial payment) of the IHT due before issuing the IHT421 reference
3. You need the IHT421 to submit your probate application
4. You cannot access estate bank accounts to pay HMRC until the probate grant is issued

Without a solution to this sequence, administration of taxable estates would grind to a halt. HMRC solved the problem through the Direct Payment Scheme.

The HMRC Direct Payment Scheme

The Direct Payment Scheme (DPS) allows executors to instruct participating UK banks to transfer money directly from the deceased's accounts to HMRC to cover the inheritance tax bill -- without requiring a grant of probate first. The bank releases the funds specifically to HMRC on your written instruction, not to you personally.

This is the standard and expected route for paying IHT from estate funds before probate. It is not a special favour from the bank -- it is a formal government scheme that most major UK banks participate in.

How to use the Direct Payment Scheme: step by step

1. Complete your IHT400 and calculate the total IHT due
2. Identify which of the deceased's banks hold sufficient funds and participate in the DPS
3. Complete form IHT423 -- one form per bank you are using. The form asks for the deceased's account details, the amount you want the bank to pay, and the HMRC payment reference
4. Send each IHT423 to the relevant bank (not to HMRC). Each bank has a specific bereavement address for DPS requests
5. The bank verifies the account details, makes the payment directly to HMRC, and sends confirmation to both you and HMRC
6. Once HMRC has received sufficient payment, they issue the IHT421 reference, which you include in your probate application

Allow two to three weeks for each bank to process an IHT423 request. If you are using multiple banks, you can send all the IHT423 forms at the same time.

Our guide to how to apply for probate covers what happens after you have the IHT421 in hand.

Which banks participate

Most major UK banks and building societies participate in the Direct Payment Scheme. These include Barclays, Lloyds, Halifax, Bank of Scotland, HSBC, NatWest, RBS, Nationwide, Santander, and Yorkshire Building Society, among others. Smaller banks, credit unions, and some newer digital banks may not participate.

If the deceased banked with an institution that does not participate in the DPS, you will need to use an alternative method to fund the IHT payment (see below).

IHT payment deadlines and interest

Inheritance tax is due six months after the end of the month in which the death occurred. For example, if the death occurred in March 2026, IHT is due by 30 September 2026.

If you miss this deadline, HMRC charges interest on the unpaid balance. The current rate is 7.75% per annum (as of May 2026), which accrues daily. Given how long probate applications can take to process, it is important to begin the IHT423 process as early as possible to avoid unnecessary interest charges.

HMRC does not grant automatic extensions for administrative delays. Interest runs regardless of whether the delay is caused by the Probate Registry's processing times or by bank processes.

The instalment option for illiquid assets

For certain illiquid assets, HMRC allows the IHT attributable to those assets to be paid in 10 equal annual instalments rather than as a lump sum. The assets that qualify include:

• Land and property (including the family home)
• Shares in unquoted (private) companies
• Business assets and agricultural property
• Certain controlling shareholdings in quoted companies

The catch is that interest still accrues on the outstanding instalments. And if the asset is sold before all 10 instalments are paid, the full remaining balance becomes due immediately. The instalment option is useful when the estate cannot liquidate assets quickly -- for example, when a family home cannot be sold until after probate is granted. For more on relevant reliefs and thresholds, see our guide to the inheritance tax nil rate band.

Paying from personal funds

If there are no suitable bank accounts in the DPS, or if the bank balance is insufficient to cover the full IHT bill, an executor can pay HMRC from their own personal funds and reclaim the amount from the estate once probate is granted and funds are accessible.

This is legally straightforward -- executors are entitled to recover genuine out-of-pocket expenses -- but requires the executor to have sufficient personal liquidity. Paying a large IHT bill from personal funds and waiting several months for reimbursement is not practical for everyone.

Executor loans

Some banks and specialist lenders offer short-term loans specifically designed to fund IHT payments during probate. The loan is secured against the estate's assets and is repaid once the estate is realised. Interest rates and fees vary, and the loan will need to be repaid from the estate, so it reduces the amount available to beneficiaries. However, for estates with significant illiquid assets and a large IHT bill, borrowing may be the most practical solution.

Speak to your bank's bereavement team or a probate specialist about what is available. Our guide to probate costs covers all the expenses you can expect during administration, including how executor loans fit into the picture.

Estates below the IHT threshold

If the estate is below the inheritance tax threshold, none of this applies -- there is no IHT to pay and no IHT421 issue to navigate. The probate application proceeds directly without any HMRC payment step. Our guide to inheritance tax explains how to establish whether the estate is taxable and what reliefs may reduce the bill.