- On August 20, 2019
COPING with the aftermath of a loved one’s death is hard enough without the added stress of financial pressures relating to Inheritance Tax (IHT).
Yet bereaved families are finding themselves forced to pay high rates of interest on outstanding IHT bills because of lengthy delays with the granting of probate.
An investigation by Telegraph Money has revealed that families are paying interest rates of more than 3% because of delays at the Probate Registry.
Under the current rules IHT bills must be paid within six months of a person’s death before the rest of the assets can be passed on to benefactors.
However, the report has found that system failures at the Probate Office has caused a backlog of cases.
This has meant that some people have found it impossible to pay the estate’s IHT bill within the legal time frame meaning they’re being hit with the punitive rate of interest on the money that’s overdue.
The Telegraph probe revealed that while securing a Grant of Probate should take around three weeks, many people are having to wait much longer.
With everything else going on, many people fail to realise that the IHT clock starts ticking as soon as a person dies.
So, by the time they’ve arranged a funeral and started sorting out the estate it’s likely that several weeks will have already passed.
This, combined with the delays at the Probate Office, means many people are being hit by the late payment penalty as most cannot afford to pay the bill until they have access to the assets within the estate.
Michael Culver, chairman of trade body Solicitors for the Elderly, told The Telegraph it was usually around three months after someone’s death before the family went to HMRC with a report on the IHT due.
This, he said, left little time for the documents to be examined and the Grant of Probate issued given the current delays.
Here’s an example of how the costs might add up: if you owe £50,000 in IHT but are unable to pay it, you will find yourself liable for nearly £110 in interest every four weeks, according to HMRC’s own calculator.
Securing a Grant of Probate is the process an estate’s executors gaining access to their assets once they have died.
All debts, including any IHT bill arising, must be cleared before the estate can be distributed to those named as beneficiaries.
Family Estate Planning can advise on all aspects of Inheritance Tax. Please email email@example.com or call Andy on 07984 013533 for an informal chat.