Form IHT423: Paying Inheritance Tax Direct From the Deceased's Bank — Worked Example
If there is Inheritance Tax to pay but no cash in the estate to pay it with, form IHT423 is how you ask the deceased's bank, building society or investment provider to send money straight to HMRC. You complete one IHT423 per account, quote the estate's Inheritance Tax reference number, and the bank pays HMRC under the Direct Payment Scheme — letting you settle the bill before probate is granted, when the executor cannot otherwise touch the money.
The chicken-and-egg problem IHT423 solves
Executors hit a wall early in almost every taxable estate. To get the grant of probate, you usually have to pay at least some of the Inheritance Tax first. But to release the deceased's money to pay that tax, the bank normally wants to see the grant. Without a solution, nobody moves.
The Direct Payment Scheme breaks the deadlock. HMRC explains it plainly: "You can ask banks, building societies or investment providers to pay some or all of the Inheritance Tax due from the deceased person's accounts. This is called the 'Direct Payment Scheme'." The money never passes through the executor's hands — it goes from the deceased's frozen account directly to HMRC — so the bank is willing to release it before the grant exists. (Source: GOV.UK — Pay Inheritance Tax from the deceased's account.)
Which banks and providers take part?
The Direct Payment Scheme is voluntary, but participation is near-universal among UK high-street banks and building societies because most of them have signed up to the British Bankers' Association / UK Finance scheme protocol. In practice that includes the major names — for example Barclays, HSBC, Lloyds, NatWest, Santander, Halifax, Nationwide and the larger building societies — as well as NS&I (National Savings & Investments). HMRC's guidance treats "banks, building societies or investment providers" as the eligible set.
Two practical caveats worth flagging before you assume an account qualifies:
- Joint accounts usually don't work. A jointly held account normally passes to the survivor by survivorship and isn't part of the estate the executor controls, so providers generally won't release from it under IHT423.
- Some products are excluded by the provider. Certain fixed-term bonds, some investment platforms and a few smaller institutions don't participate. Always ask the provider whether it accepts IHT423 before you rely on a specific account for the cash.
If you are unsure whether a particular institution participates, ring its bereavement team and ask directly — most have a dedicated probate or bereavement department that handles IHT423 requests routinely.
Worked example: a £60,000 bill paid from two accounts
The estate. Margaret Whitlow, a widow, dies on 14 March 2026 in England. Her executor is her daughter, Priya. The full IHT400 return shows a net estate of £900,000 and an Inheritance Tax bill of £60,000 due to HMRC.
Margaret left no ready cash with the executor — everything is locked up. Two accounts she held solely can pay the tax:
| Account | Provider | Balance | Amount requested on IHT423 |
|---|---|---|---|
| Current account | Lloyds | £25,000 | £25,000 |
| Easy-access savings | Nationwide | £50,000 | £35,000 |
| Total | — | £75,000 | £60,000 |
Step 1 — Get the reference number first. Before anything else, Priya applies for the estate's Inheritance Tax reference number. HMRC is explicit: "You'll need to get an Inheritance Tax reference number from HM Revenue and Customs (HMRC) at least 3 weeks before you make a payment." She applies online (form IHT422 is the postal alternative). This single reference is what every IHT423 must quote. (Source: GOV.UK — Get a reference number.)
Step 2 — Complete two IHT423 forms. Because HMRC requires a separate form for each account, Priya fills in two IHT423s — one for the Lloyds account asking for £25,000, one for the Nationwide account asking for £35,000. Both quote the same Inheritance Tax reference from Step 1.
Step 3 — Send each form to its own bank. The Lloyds IHT423 goes to Lloyds' bereavement team; the Nationwide one goes to Nationwide. You do not send IHT423 to HMRC. Each provider then transfers its slice straight to HMRC.
Step 4 — The maths checks out. £25,000 + £35,000 = £60,000, which clears the bill in full. Priya deliberately left £15,000 in the Nationwide account untouched, giving a buffer for funeral costs, professional fees and any small upward correction to the tax figure.
Result. Once HMRC has received the funds and processed the IHT400, it issues the unique code Priya needs to apply for the grant — with no money ever having passed through her own bank account.
Why split across two banks at all?
Three good reasons. First, no single account here held the full £60,000, so a split was unavoidable. Second, splitting protects liquidity — emptying one account to £0 can trigger problems with standing direct debits or leave no cushion. Third, spreading the request reduces the impact if one provider is slow to act: the other payment can still land on time.
How IHT423 links to IHT400 and IHT421
IHT423 doesn't live in isolation — it sits inside the full-return process for taxable estates. Here is how the three forms relate.
| Form | What it is | Its job in the chain |
|---|---|---|
| IHT400 | The full Inheritance Tax account | Reports the whole estate and calculates the tax due. This is the figure your IHT423 payments must add up to. |
| IHT421 | Probate Summary (England, Wales & NI) | Summarises the estate for the probate registry. HMRC now sends it directly to HMCTS Probate rather than back to you, and supplies a unique code for the grant application. |
| IHT423 | Direct Payment Scheme instruction | Pays the tax from the deceased's accounts so the IHT400 can be processed and the grant released. |
The sequence in plain terms: you prepare the IHT400 (and its schedules), obtain the reference number, send your IHT423 forms so the banks pay, then submit the IHT400 with IHT421. HMRC reconciles the payment, and — since a 2020 change — HMRC sends the completed IHT421 directly to HMCTS Probate and gives you a unique code to apply for the grant. (Sources: GOV.UK — IHT421 Probate Summary; GOV.UK — Applying for probate, before you apply.)
Why you must pay before the grant — and the six-month deadline
Two separate timing rules catch executors out, and IHT423 is the tool for hitting both.
1. Pay before the grant. HMRC states: "You usually need to make a payment towards any Inheritance Tax due before you can get a 'grant of representation' (also known as 'probate')." No payment, no grant — and without the grant you cannot legally administer most of the estate. IHT423 lets you pay using the estate's own money before that grant exists. (Source: GOV.UK — Pay your Inheritance Tax bill.)
2. The six-month interest deadline. Separately, HMRC says: "You must pay Inheritance Tax by the end of the sixth month after the person died. For example, if the person died in January, you must pay by 31 July." Pay later and HMRC charges interest on the outstanding amount. In our worked example Margaret died on 14 March 2026, so the bill must be settled by 30 September 2026 to avoid interest.
Stack the two together and the timeline gets tight: you need the reference number at least three weeks before paying, and banks can take a couple of weeks to action an IHT423. Start the IHT423 process early — aim to have forms with the banks well inside month four or five after death, not in the final fortnight.
- IHT423 is a payment instruction to a bank, not a tax return — it tells the provider to send money straight to HMRC from the deceased's account.
- One form per account. Paying from three accounts means three IHT423 forms, all quoting the same Inheritance Tax reference.
- Get the reference number at least 3 weeks before paying (online or via IHT422). No reference, no payment.
- Send each IHT423 to the bank, not to HMRC. The bank pays HMRC; you send the IHT400 and IHT421 separately.
- You must usually pay before the grant is issued, and clear the full bill by the end of the sixth month after death to avoid interest.
- Joint accounts and some products are excluded — confirm participation with the provider's bereavement team first.
Do I send form IHT423 to HMRC or to the bank?
To the bank, building society or investment provider that holds the account — not to HMRC. The provider then transfers the money directly to HMRC under the Direct Payment Scheme. Your IHT400 and IHT421 go to HMRC separately.
How many IHT423 forms do I need for multiple accounts?
One per account. HMRC requires "a separate form for each account you want to pay HMRC from." If you are drawing on three different accounts you complete three IHT423 forms, each quoting the same estate Inheritance Tax reference number.
What reference number does IHT423 need, and how do I get it?
You need the estate's Inheritance Tax reference number, which you must obtain from HMRC at least three weeks before you make a payment. Apply online, or by post using form IHT422. Every IHT423 you send must quote this same reference.
Can I use IHT423 before probate is granted?
Yes — that is the whole point. The Direct Payment Scheme lets the deceased's bank pay HMRC before the grant exists, which is exactly when the executor cannot otherwise access the funds. You can start the process before you have probate.
What is the deadline to pay Inheritance Tax this way?
Inheritance Tax must be paid by the end of the sixth month after the person died — for example, a death in January means payment by 31 July. HMRC charges interest on anything paid after that date, so start the IHT423 process early to leave time for the reference number and the bank's processing.
Can I pay from a joint account using IHT423?
Usually not. A jointly held account typically passes to the surviving holder by survivorship and is not part of the estate the executor controls, so providers generally will not release funds from it under the Direct Payment Scheme. Use accounts the deceased held in their sole name.
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