Ease the emotional burden of Inheritance Tax with the Direct Payment Scheme

By Anna Brooksbank, Senior Business Development Manager.

Your clients losing a loved one is an emotionally challenging period for them and a moment where they are going to need to rely on their financial advisor. During this difficult time dealing with Inheritance Tax (IHT) responsibilities can add significant stress.

One effective yet underutilised solution you could introduce is the Direct Payment Scheme (DPS), accessible through our Blackfinch Adapt or AIM IHT solution.

The DPS scheme is a scheme run by HMRC of which Blackfinch is a voluntary member. It allows executors to settle the IHT liability by taking funds directly from the deceased client’s Blackfinch Adapt or AIM Service.

This means that any IHT liabilities can be settled by funds been directly sent to HMRC from the deceased’s holdings. This allows for the process of grant of probate to be sped up.

Save clients from stress and interest

As a financial advisor, using the DPS is a clear demonstration of your thoughtful planning during a time when your clients most need support. IHT must typically be paid within six months of a person’s death but often settling the estate can take six to twelve months or more.

After the six months has passed on the IHT burden, interest starts building on outstanding amounts. Without proper arrangements, families might feel rushed into liquidating assets prematurely or arranging costly short-term finance. By using the DPS, you ensure that IHT liability is paid promptly.

To access the Direct Payment Scheme on behalf of a client:

For Blackfinch to facilitate an IHT HMRC payment for your client, we require the following documentation:

A copy of the client’s Will certified by a solicitor (this needs to be certified on every page).
The completed IHT423 form along with the IHT400 form (if an IHT400 form is not available, Blackfinch cannot be held responsible for any errors in the IHT liability calculation provided by the adviser or the client’s estate when making a direct payment to HMRC).
1 form of certified photo ID for each Executor or a completed Verification of Identity form.
A letter of instruction signed and dated by all Executors. Example wording for this letter can be found below:

Example wording for letter of instruction:

Please accept these instructions on behalf of [CLIENT NAME]'s executor(s) to his/her estate to sell down sufficient shares in the (CONFIRM HOLDING) to cover the inheritance tax bill of £(CONFIRM AMOUNT) as confirmed in the HMRC IHT400 form. These monies are to be paid directly to the HMRC to enable probate to be granted.

I/We agree to indemnify you against all liabilities, costs, expenses, damages and losses (including but not limited to any direct, indirect or consequential losses, loss of profit, loss of reputation and all interest, penalties and legal costs (calculated on a full indemnity basis) and all other reasonable professional costs and expenses) suffered or incurred by you arising out of or in connection with you carrying out these instructions.

Helping beneficiaries of a client pay their IHT bill

IHT planning focuses on your current clients, but the impact on the clients’ beneficiaries, often their children, can be overlooked. This is despite them being the ones who’ll ultimately bear the tax burden. Investing through an approved DPS member like Blackfinch simplifies the IHT process and positions you to build relationships with this next generation of clients.

Conclusion

By investing with Blackfinch and having access to the DPS, the process of settling IHT liabilities can be made simpler and more efficient. This can alleviate emotional and financial pressures clients face when losing a loved one.

Advisors who introduce DPS proactively not only simplify the IHT process but also reinforce their commitment to compassionate client service during sensitive times. Your thoughtful planning can make a genuine difference, helping families navigate Inheritance Tax smoothly, allowing them essential space and time to heal.

If you would like to know more about the Direct Payment Scheme, Inheritance Tax and how to structure portfolios to manage client tax headaches, then get in touch with our Business Development Team. They’re based all across the UK, have extensive experience in the tax-efficient investment landscape and can offer a wide range of services – from 1-2-1 or group training through to worked tax calculations and IHT calculators.

Blackfinch offers a number of investment solutions, to address a range of client objectives.
Request an illustration or get in touch with your local Business Development Manager (BDM) today.

Please note:

Benefits of tax-efficient investments are subject to change and personal circumstances. Business Relief rules are changing in April
2026. See the Guide to Business Relief for more information.

IMPORTANT INFORMATION
Capital at risk. All information correct at April 2025.