Who pays the tax and when?
The tax is normally payable by your beneficiaries on your death. The tax bill must be paid within six months of the death and before Probate is granted. That is before the Will is officially recognised and the estate can be divided up amongst the beneficiaries. This can be very difficult for those inheriting the estate because they may have to sell assets – the family home, for example – in order to pay the tax bill. This often means selling at a loss under pressure to realise capital early. HM Revenue & Customs have the right to be paid first and this timing issue is exactly the sort of difficulty good planning can overcome.