Important - change in Inheritance Tax interest rate

From 6 November 2008 the interest charged on payments of Inheritance Tax received after the due date changed from 4 per cent to 3 per cent.

The IHT200 Integrated Account has not yet been amended to reflect this change. If you are using the IHT200 Integrated Account after the due date (more than six months from the end of the month in which the deceased died) the IHT200 WS will calculate the interest at the old rate. The interest is shown at box TX7 on the IHT200 (WS).

Until an amended IHT200 can be published, you can adjust the amount of interest charged by deducting interest at 1 per cent for the number of days which have elapsed since 6 November by following these steps:

• Step 1 – count the days from 6 November to today’s date (inclusive)
• Step 2 – multiply the amount of tax due by 1 per cent
• Step 3 - multiply the answer from step 2 by the number of days at step 1
• Step 4 - divide the answer at step 3 by 366
• Step 5 – subtract the answer from step 4 from the amount automatically calculated in
  box TX7 of the IHT200 (WS) and type the answer in box TX7.

Example

Inheritance Tax of £10,000 is due. The due date has passed, so interest is due. The IHT200(WS) has calculated an amount of interest in box TX7 as £423.60. Today is 12 November.

• Step 1 - it is seven days from 6 November to 12 November inclusive
• Step 2 - £10,000 tax X 1% = £100
• Step 3 - £100 x 7 = 700
• Step 4 – 700 divided by 366 = £1.91
• Step 5 – subtract £1.91 from the interest at TX7
  £423.60 - £1.91 = £421.69

Type £421.69 in box TX7 and press the ‘tab’ key. The interest and tax will recalculate at TX8.