Tax · 4 min read
The direct payment scheme: paying IHT from frozen accounts
The direct payment scheme lets banks and building societies transfer money straight from the deceased's frozen accounts to HMRC, before any grant exists.
Written and reviewed by Ramani Gill, Founder & CEO — Solicitor, TEP, BA, LLM. Last reviewed 2026-08-19.
How it works
- Calculate the tax on the IHT400
- Complete a separate IHT423 for each bank or building society you want to pay from
- Send each IHT423 to that institution, not to HMRC
- Send the IHT400 and schedules to HMRC at the same time
- The institutions transfer the funds to HMRC quoting the estate's reference
Practical points
- You need an Inheritance Tax reference number before you can pay — apply for it well in advance
- Participation is voluntary but most major banks take part
- NS&I and some investment providers will also release funds this way
- You can combine the scheme with instalments and with a personal contribution
Apply for the reference early
The IHT reference must be requested at least three weeks before you intend to pay. Executors routinely lose a month here.Common questions
- Can the scheme pay all of the tax?
- Only up to the funds available in the participating accounts. Any shortfall has to come from instalments, a loan or the beneficiaries.
Not sure whether this estate is straightforward?
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Related guides
- Paying Inheritance Tax before you have the grant
- The IHT400 schedules: which ones you actually need
- Inheritance Tax explained: the nil-rate bands
- Excepted estates: when you don't need a full IHT account
General information only, not legal or tax advice. Last checked 2026-08-19.