Funding The IHT when Obtaining grant of representation Flashcards
What is the Direct Payment Scheme for IHT?
It allows PRs to pay IHT directly from the deceased’s accounts through participating banks and building societies
What form do PRs use to transfer money to HMRC under the Direct Payment Scheme?
PRs must complete and send an IHT423 form to each bank or building society, along with the IHT400 to HMRC.
How does HMRC confirm IHT payment through the Direct Payment Scheme?
Once HMRC receives the payment, they email the IHT receipt (IHT421) to HMCTS and notify the solicitor.
What should PRs do if there is an urgent need for a grant?
PRs should find an alternative funding source, as the Direct Payment Scheme can be slow. Solicitors often make private arrangements with banks and building societies under which the bank or building society transfer funds directly to HMRC from the deceased accounts. This is a relatively quick and easy method of funding.
How can life insurance help pay IHT?
Life insurance companies may release funds directly to HMRC if the policy proceeds are payable to the estate.
How can small assets be realized without a grant?
Under the Administration of Estates (Small Payments) Act 1965, assets up to £5,000 can be realized without a grant, at the institution’s discretion.
How can beneficiaries help pay IHT?
Wealthy beneficiaries may lend funds for IHT, or use assets they’ve received (e.g., jointly held bank accounts or life insurance) to pay the tax.
How can bank borrowing help pay IHT?
Banks may lend against the estate, with PR or solicitor undertakings, but borrowing is costly and should be repaid quickly to stop interest.
Can National Savings be used to pay IHT?
Yes, National Savings accounts, certificates, and government stock can be used to pay IHT.
