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One-fifth of people facing higher inheritance tax bills with probate delays continuing

The families are facing extra death duties because overdue IHT carries interest rates of 3.25 per cent.

Part of the Inheritance Tax bill must be paid in advance of probate, and banks do release funds to facilitate this, but the remaining balance of the Inheritance Tax  (most commonly the proportion which is due on the value of residential or investment property) must be settled no later than six months after their death, or interest has to be paid.

But delays at the Probate Registry caused by the introduction of new systems and new IT, intended to make the process quicker, have made it difficult to pay the Tax within six months, with many cases taking as long as eight months.

Some experts have said that as probate grants are now taking as long as 13 weeks, compared with 2 to 4 weeks before the changes were introduced, that there needs to be an extension to the six month period to allow for the delays.

A spokesperson for HM Courts & Tribunals Service, said: “Probate applications are only processed when the relevant IHT form has been completed, so, even with current delays of four to six weeks on average, those who apply in good time should be able to pay IHT well within the six-month window.”

David Webb, head of Wills Probate and Older Client Services at Mander Hadley Ltd, commented “It is unclear why the Court Service is claiming a faster turnaround time than is being experienced by practitioners, and the refusal to acknowledge facts is unhelpful”

A spokesperson for HMRC, said: “Interest is charged on late payments to repay the Exchequer for the loss of tax. When a customer knows their HMRC IHT reference they may make a payment on account to avoid interest.”

David Webb commented “It can be difficult if not impossible for a good many families to find the Tax without having probate available to them.  That is a reality which HMRC refuse to acknowledge, and furthermore it is worth noting that while HMRC charge a commercial interest rate of 3.25 per cent p.a. on Tax which is paid late, to make good the loss to the Treasury,  they only pay interest of 0.5 per cent p.a. on Tax which has to be refunded to the taxpayer”.

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David Webb

David Webb

Director - Head of Wills, Probate & Older Client Services
I specialise in probate and the administration of estates, trust and tax planning, preparation of Wills, Lasting Powers of Attorney and Court of Protection applications.

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