In a recent article, The Times sheds light on the convoluted and costly process of handling someone’s estate after death, particularly the intersection of probate and inheritance tax (IHT) regulations.
While the child benefit system undergoes overdue reforms, The Times draws attention to the perplexing dynamics surrounding property-rich, cash-poor families caught in a probate-IHT loop.
The current system dictates that any property solely owned by a deceased individual cannot be sold until probate is granted. However, IHT bills must typically be settled before probate is approved, and failure to pay within six months results in a hefty 7.75% interest charge. For those relying on property sales to cover IHT costs, executors find themselves in a financial bind, unable to proceed with probate until the bill is paid, yet unable to pay until the property is sold.
The Times reveals that although HM Revenue & Customs may, in exceptional cases, grant a deferred payment plan known as a “grant on credit,” stringent conditions apply. Families must prove their inability to secure commercial loans and lack of funds, a hurdle that, until recently, required rigorous verification.
The 7.75% interest on late payments persists, and with chronic delays in the probate process—exceeding the government’s suggested 16 weeks—families are left to accrue substantial interest charges while awaiting application approvals from HM Courts & Tribunals Service.
The publication decries the absurdity of families paying a bill for an unsold property and questions the logic of one government body (HMRC) benefiting from the delays of another (HM Courts & Tribunals Service). The Times suggests a more sensible approach would be to grant probate before settling the IHT bill or, at the very least, suspend interest charges until the systemic delays are rectified.
One Response
There just seems a simple common sense approach, to delay until probate is sorted .. but then such a simple and common sense approach involves separate government departments … so the outcome remains unchanged !
#Wills #Trusts #Probate