NS&I: paying IHT and the Direct Payment scheme

[yorkshirelad1]

There have been several mentions of the Direct Payment Scheme (where IHT can be paid direct from a bank account to HMRC before probate, in order to get probate, where the account would otherwise be 'frozen' before probate) and using NS&I accounts.

Readers may be interested to read this FOI request (which I stumbled on while looking for something else)
https://www.whatdotheyknow.com/request/details_of_the_arrangements_for#incoming-1590679

It seems as if NS&I were (before about 2020) a bit slower than other banks (using their own methods), but have (since around 2020) adopted the scheme similar to other banks in the Direct Payment scheme.

[Eboli]

The correct HMRC form to use can be found here:

https://www.gov.uk/government/publicati ... unt-iht423

Eb.

[raybarrow]

Hi Folks,
My brother just had a nightmare as an executor for his Brother in Law. BiL had a clause in his will leaving the house and other stuff to BiL's wife, 'Free of IHT'. Never heard of it but seems to protect those items from being used to pay IHT. There was probably enough money in banks etc a/cs to cover IHT when the will was made but that was no longer the case when he died. My brother and the other executor had to find the money to pay IHT so they could get probate. All done and dusted now but a stressful time to be suddenly faced with that.

A good reason to review a will at regular intervals.

Ray.

[Eboli]

raybarrow said

My brother just had a nightmare as an executor for his Brother in Law. BiL had a clause in his will leaving the house and other stuff to BiL's wife, 'Free of IHT'. Never heard of it but seems to protect those items from being used to pay IHT. There was probably enough money in banks etc a/cs to cover IHT when the will was made but that was no longer the case when he died. My brother and the other executor had to find the money to pay IHT so they could get probate. All done and dusted now but a stressful time to be suddenly faced with that.

A good reason to review a will at regular intervals.

This is puzzling to say the least. A gift to a surviving spouse (BiL's wife) is exempt from IHT. So whether BiL left the gift "free of IHT" or not would not have made once penny difference to the IHT liability unless the BiL's wife was non-domiciled (when there is a limit to the exemption). Assuming the BiL's wife is UK domiciled, then redbarrow is raising the more widespread problem of who pays the IHT. Unless specific gifts are made "free of IHT" (with all the complications of grossing up) then the order of liability is important. Normally the recipients of specific gifts are liable to IHT upon them before the executors and then the residue of the estate. Only at that point is the position of the executors "tricky". So it is not clear from red barrow's post if the gift to the BiL's wife had anything to do with the problem.

Eb