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D3a. Payment of IHT

IHT: 6 months or end of April

"(1)     Except as otherwise provided by the following provisions of this Part of this Act, the tax on the value transferred by a chargeable transfer shall be due six months after the end of the month in which the chargeable transfer is made or, in the case of a transfer made after 5th April and before 1st October in any year otherwise than on death, at the end of April in the next year." (IHTA 1984, s.226(1))

IHT: 6 months or end of April

Personal representatives to pay tax they are liable for on delivery of account

 

"(2)     Personal representatives shall, on delivery of their account, pay all the tax for which they are liable and may, on delivery of that account, also pay any part of the tax chargeable on the death for which they are not liable, if the persons liable for it request them to make the payment." (IHTA 1984, s.226(2))

Personal representatives to pay tax they are liable for on delivery of account​

Additional tax on lifetime chargeable transfer and failed PET due within 6 months of death month

 

"(3)     So much of the tax chargeable on the value transferred by a chargeable transfer made within seven years of the death of the transferor as—

(a)     exceeds what it would have been had the transferor died more than seven years after the transfer, 

shall be due six months after the end of the month in which the death occurs.

(3A)     Without prejudice to subsection (3) above, the tax chargeable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer shall be due six months after the end of the month in which the transferor's death occurs.

(3B)     So much (if any) of the tax chargeable on the value transferred by a chargeable transfer made under Chapter III of Part III of this Act within the period of seven years ending with the settlor's death as exceeds what it would have been had the settlor died more than seven years after the date of the transfer shall be due six months after the end of the month in which the death occurs." (IHTA 1984, s.226(3) - (3B))

Additional tax on lifetime chargeable transfer and failed PET due within 6 months of death month

IHT on trust events: within 6 months of chargeable transfer

 

"(3C)     Tax chargeable under Chapter 3 of Part 3 of this Act on the value transferred by a chargeable transfer, other than any for which the due date is given by subsection (3B) above, is due six months after the end of the month in which the chargeable transfer is made." (IHTA 1984, s.226(3C))

IHT on trust events: within 6 months of chargeable transfer

Conditionally exempt transfers and trees/underwood

 

"(4)     Tax chargeable under section 32, 32A, 79 or 126 above or under Schedule 5 to this Act shall be due six months after the end of the month in which the event by reason of which it is chargeable occurs." (IHTA 1984, s.226(4))

Conditionally exempt transfers and trees/underwood

Payment by instalments

Payment by instalments

- Land, shares and businesses

 

"(1)     Where any of the tax payable on the value transferred by a chargeable transfer is attributable to the value of qualifying property and—

(a)     the transfer is made on death, or

(b)     the tax so attributable is borne by the person benefiting from the transfer, or

(c)     the transfer is made under Part III of this Act and the property concerned continues to be comprised in the settlement,

the tax so attributable may, if the person paying it by notice in writing to the Board so elects, be paid by ten equal yearly instalments.

 

(1A)     Subsection (1) above does not apply to—

(a)     tax payable on the value transferred by a potentially exempt transfer which proves to be a chargeable transfer, or

(b)     additional tax becoming payable on the value transferred by any chargeable transfer by reason of the transferor's death within seven years of the transfer,

except to the extent that the tax is attributable to the value of property which satisfies one of the conditions specified in subsection (1C) below and, in the case of property consisting of unquoted shares or unquoted securities, the further condition specified in section 228(3A) below.

 

(1AA)     In subsection (1A) above, “unquoted”, in relation to any shares or securities, means not listed on a recognised stock exchange.

 

(1B)     In this section “the transferee” means the person whose property the qualifying property became on the transfer or, where on the transfer the qualifying property became comprised in a settlement in which no qualifying interest in possession (within the meaning of Chapter III of Part III of this Act) subsists, the trustees of the settlement.

(1C)     The conditions referred to in subsection (1A) above are—

(a)     that the property was owned by the transferee throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or, if earlier, the death of the transferee), or

(b)     that for the purposes of determining the tax, or additional tax, due by reason of the death of the transferor, the value of the property is reduced in accordance with the provisions of Chapter I or Chapter II of Part V of this Act by virtue of section 113B or section 124B above.

 

(2)     In this section “qualifying property” means—

(a)     land of any description, wherever situated;

(b)     shares or securities to which section 228 below applies;

(c)     a business or an interest in a business.

 

(3)     The first of the instalments referred to in subsection (1) above shall be payable—

(a)     if the chargeable transfer was made on death, six months after the end of the month in which the death occurred, and

(b)     in any other case, at the time when the tax would be due if it were not payable by instalments;

and interest under section 233 below on the unpaid portion of the tax shall be added to each instalment and paid accordingly, except as otherwise provided in section 234 below.

 

(4)     Notwithstanding the making of an election under this section, the tax for the time being unpaid, with interest to the time of payment, may be paid at any time; and if at any time (whether before or after the date when the first instalment is payable) the whole or any part of the property concerned is sold, the tax unpaid (or, in the case of a sale of part, the proportionate part of that tax) shall become payable forthwith (or, if the sale precedes the date when the first instalment is payable, on that date) together with any interest accrued under section 233 below.

 

(5)     References in subsection (4) above to the sale of property shall have effect—

(a)     in a case within subsection (1)(b) above [other than a case within subsection (1A) above where the transferee dies before the transferor]2, as if they included references to any chargeable transfer in which the value transferred is wholly or partly attributable to the value of the property, other than a transfer made on death, and

(b)     in a case within subsection (1)(c) above, as references to the property ceasing to be comprised in the settlement.

 

(6)     For the purposes of subsection (4) above—

(a)     the sale of an interest or part of an interest in a business shall be treated as a sale of part of the business, and

(b)     the payment, under a partnership agreement or otherwise, of a sum in satisfaction of the whole or part of an interest in a business otherwise than on a sale shall be treated as a sale of the interest or part at the time of payment.

 

(7)     For the purposes of this section—

(a)     the value of a business or of an interest in a business shall be taken to be its net value;

(b)     the net value of a business is the value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purposes of the business;

(c)     in ascertaining the net value of an interest in a business, no regard shall be had to assets or liabilities other than those by reference to which the net value of the business would have fallen to be ascertained if the tax had been attributable to the entire business; and

(d)     “business” includes a business carried on in the exercise of a profession or vocation, but does not include a business carried on otherwise than for gain." (IHTA 1984, s.227)

- Land, shares and businesses

- When shares are qualifying property

 

"(1)     This section applies—

(a)     to shares or securities of a company which immediately before the chargeable transfer gave control of the company—

(i)     in the case of a transfer on death, to the deceased,

(ii)     in the case of a transfer under Chapter III of Part III of this Act, to the trustees, and

(iii)     in any other case, to the transferor;

(b)     to shares or securities of a company which do not fall under paragraph (a) above and are unquoted, if the chargeable transfer is made on death and the condition stated in subsection (2) below is satisfied;

(c)     to shares or securities of a company which do not fall under paragraph (a) above and are unquoted, if the Board are satisfied that the tax attributable to their value cannot be paid in one sum without undue hardship (assuming, in the case of a chargeable transfer made otherwise than on death, that the shares or securities would be retained by the persons liable to pay the tax);

(d)     to shares of a company which do not fall under paragraph (a) above and are unquoted, if the conditions stated in subsection (3) below are satisfied.

(2)     The condition mentioned in subsection (1)(b) above is that not less than 20 per cent of so much of the tax chargeable on the value transferred as is tax for which the person paying the tax attributable as mentioned in section 227(1) above is liable (in the same capacity) consists of tax attributable to the value of the shares or securities or such other tax (if any) as may by virtue of section 227 be paid by instalments.

(3)     The conditions mentioned in subsection (1)(d) above are that so much of the value transferred (calculated, if the transfer is not made on death, as if no tax were chargeable on it) as is attributable to the shares exceeds £20,000, and that either—

(a)     the nominal value of the shares is not less than 10 per cent of the nominal value of all the shares of the company at the time of the transfer, or

(b)     the shares are ordinary shares and their nominal value is not less than 10 per cent of the nominal value of all ordinary shares of the company at that time.

(3A)     The further condition referred to in section 227(1A) above is that the shares or securities remained unquoted throughout the period beginning with the date of the chargeable transfer and ending with the death of the transferor (or, if earlier, the death of the transferee).

(4)     In this section “ordinary shares” means shares which carry either—

(a)     a right to dividends not restricted to dividends at a fixed rate, or

(b)     a right to conversion into shares carrying such a right as is mentioned in paragraph (a) above.

(5)     In this section “unquoted”, in relation to any shares or securities, means not listed on a recognised stock exchange." (IHTA 1984, s.228)

- When shares are qualifying property

- Woodlands

 

"Tax chargeable on such a chargeable transfer as is mentioned in section 129 above may, if the person paying the tax by notice in writing to the Board so elects, be paid by ten equal yearly instalments, of which the first shall be payable six months after the end of the month in which the transfer is made." (IHTA 1984, s.229)

- Woodlands

- Interest on tax paid by instalments

 

See s.234 and S1: Interest to HMRC

- Interest on tax paid by instalments

Acceptance of property in satisfaction of tax

"(1)     The Board may, if they think fit and the Secretary of State agrees, on the application of any person liable to pay tax or interest payable under section 233 below, accept in satisfaction of the whole or any part of it any property to which this section applies.

(2)     This section applies to any such land as may be agreed upon between the Board and the person liable to pay tax.

(3)     This section also applies to any objects which are or have been kept in any building—

(a)     if the Board have determined to accept or have accepted that building in satisfaction or part satisfaction of tax or of estate duty, or

(b)     if the building or any interest in it belongs to Her Majesty in right of the Crown or of the Duchy of Lancaster, or belongs to the Duchy of Cornwall or belongs to a Government department or is held for the purposes of a Government department, or

(c)     if the building is one of which the Secretary of State is guardian under the Ancient Monuments and Archaeological Areas Act 1979 or of which the Department of the Environment for Northern Ireland is guardian under the Historic Monuments and Archaeological Objects (Northern Ireland) Order 1995, or

(d)     if the building belongs to any body within Schedule 3 to this Act,

in any case where it appears to the Secretary of State desirable for the objects to remain associated with the building.

(4)     This section also applies to—

(a)     any picture, print, book, manuscript, work of art, scientific object or other thing which the Secretary of State is satisfied is pre-eminent for its national, scientific, historic or artistic interest, and

(b)     any collection or group of pictures, prints, books, manuscripts, works of art, scientific objects or other things if the Secretary of State is satisfied that the collection or group, taken as a whole, is pre-eminent for its national, scientific, historic or artistic interest.

(5)     In this section—

“national interest” includes interest within any part of the United Kingdom;

and in determining under subsection (4) above whether an object or collection or group of objects is pre-eminent, regard shall be had to any significant association of the object, collection or group with a particular place.

(6)     The functions of the Ministers under this section in relation to the acceptance, in satisfaction of tax, of property in which there is a Scottish interest may be exercised separately.

(7)     For the purposes of subsection (6) a Scottish interest in the property exists—

(a)     where the property is located in Scotland; or

(b)     the person liable to pay the tax has expressed a wish or imposed a condition on his offer of the property in satisfaction of tax that it be displayed in Scotland or disposed of or transferred to a body or institution in Scotland." (IHTA 1984, s.230)

"(1)     Where a person has power to sell any property in order to raise money for the payment of tax, he may agree with the Board for the property to be accepted in satisfaction of that tax in pursuance of section 230 above; and, except as regards the nature of the consideration and its receipt and application, any such agreement shall be subject to the same provisions and shall be treated for all purposes as a sale made in the exercise of the said power, and any conveyance or transfer made or purporting to be made to give effect to such an agreement shall have effect accordingly.

(2)     The references in subsection (1) above to tax include references to interest payable under section 233 below.

(3)     This section shall not affect paragraph 1(4) or 3(4) of Schedule 5 to this Act." (IHTA 1984, s.231)

Court to provide for payment of tax out of property under its control

 

"Where proceedings are pending in any court for the administration of any property to the value of which any tax charged on the value transferred by a chargeable transfer is attributable, the court shall provide, out of any such property in the possession or control of the court, for the payment of any of the tax so attributable, or interest on it, which remains unpaid." (IHTA 1984, s.232)

Acceptance of property in satisfaction of tax
Court to provide for payment of tax out of property under its control

Automatic charge for unpaid IHT


See U3: Security for direct tax

Automatic charge for unpaid IHT

Certificate of discharge

 

"(1)     Where application is made to the Board by a person liable for any tax on the value transferred by a chargeable transfer which is attributable to the value of property specified in the application, the Board, on being satisfied that the tax so attributable has been or will be paid, may give a certificate to that effect, and shall do so if the chargeable transfer is one made on death or the transferor has died.

(2)     Where tax is or may be chargeable on the value transferred by a transfer of value and—

(a)     application is made to the Board after the expiration of two years from the transfer (or, if the Board think fit to entertain the application, at an earlier time) by a person who is or might be liable for the whole or part of the tax, and

(b)     the applicant delivers to the Board, if the transfer is one made on death, a full statement to the best of his knowledge and belief of all property included in the estate of the deceased immediately before his death and, in any other case, a full and proper account under this Part of this Act,

the Board may, as the case requires, determine the amount of the tax or determine that no tax is chargeable; and subject to the payment of any tax so determined to be chargeable the Board may give a certificate of their determination, and shall do so if the transfer of value is one made on death or the transferor has died.

(2A)     An application under subsection (1) or (2) above with respect to tax which is or may become chargeable on the value transferred by a potentially exempt transfer may not be made before the expiration of two years from the death of the transferor (except where the Board think fit to entertain the application at an earlier time after the death).

(3)     Subject to subsection (4) below,—

(a)     a certificate under subsection (1) above shall discharge the property shown in it from the Inland Revenue charge on its acquisition by a purchaser, and

(b)     a certificate under subsection (2) above shall discharge all persons from any further claim for the tax on the value transferred by the chargeable transfer concerned and extinguish any Inland Revenue charge for that tax.

(4)     A certificate under this section shall not discharge any person from tax in case of fraud or failure to disclose material facts and shall not affect any further tax—

(a)     that may afterwards be shown to be payable by virtue of section 93, 142, 143, 144 or 145 above,

(aa)     that may afterwards be shown to be payable by reason of too great an increase having been made under section 8A(3) above, or

(b)     that may be payable if any further property is afterwards shown to have been included in the estate of a deceased person immediately before his death;

but in so far as the certificate shows any tax to be attributable to the value of any property it shall remain valid in favour of a purchaser of that property without notice of any fact invalidating the certificate.

(5)     References in this section to a transfer of value, or to the value transferred by a transfer of value, shall be construed as including references to an occasion on which tax is chargeable under Chapter III of Part III of this Act (apart from section 79) or to the amount on which tax is then chargeable." (IHTA 1984, s.239)

Certificate of discharge
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