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ACCA Applied Skills · Taxation (UK) · Payment of inheritance tax

Mehmet died on 15 March 2026. His estate included a freehold office building on which the inheritance tax (IHT) was £300,000. His executors elect to pay this tax by instalments. Which option correctly states the amount of each instalment and the due date of the first instalment?

Tax on the office building can be paid in ten equal annual instalments, so £300,000 gives £30,000 each. On death the first instalment falls due six months after the end of the month of death, which here is 30 September 2026.

  1. A£30,000 per year, first due 30 September 2026Correct
  2. B£30,000 per year, first due 15 September 2026
  3. C£60,000 per year, first due 30 September 2026
  4. D£30,000 per year, first due 31 March 2027

Explanation

Tax on qualifying land and buildings can be paid in 10 equal annual instalments: £300,000 / 10 = £30,000. On death the first instalment is due six months after the end of the month of death, so the end of March 2026 plus six months gives 30 September 2026. Choosing £60,000 uses 5 instalments, which is wrong. Using 15 September 2026 counts six months from the date of death rather than from the month end.

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