Depending on the size of the estate, Inheritance Tax (or IHT for short) is a tax that can become payable on the value of an estate when a person dies.
If you are in receipt of an IHT bill, this could come as a shock, especially when it comes to paying the tax. Not everyone will have funds readily available for these situations, so the obvious reaction may be to contact HMRC to seek help and advice.
HMRC Grant on Credit
HMRC do provide a payment option in this situation, – called Grant on Credit, which essentially allows HMRC to grant probate as long as there is an agreed method of payment for the IHT going forward. This however, like many initiatives set up by HMRC, may not be as straight forward as it seems.
Hannah Berridge, Legal Executive at SMH Wills & Probate explains in more detail:
“HMRC are not always as forthcoming as they say they are when it comes to offering Grant on Credit in relation to IHT. It’s a larger risk for them to recover the tax and in an ideal situation they prefer individuals to find their own solutions to pay what they owe.
We have seen in recent examples published that HMRC now requires actual proof that an individual has attempted to, but has been unsuccessful, in securing funding to pay their IHT bill prior to issuing them with a Grant on Credit.
If there is an IHT bill, and even if instalment options are being used to pay the IHT, the first instalment still needs to be settled before HMRC issue clearance to the probate registry for the grant to be produced.
So, if the asset is simply a valuable property and there is no or very little cash, whilst the executors wait to sell the property (which they can’t complete without the grant) they need to pay the first instalment of IHT at 10%, which begs the question ‘where are they getting this from’?
There are ways around this, which we can help with here at SMH Wills & Probate. If you are in receipt of an IHT bill and would like to explore your options around how to pay this, please drop us a line to discuss how we can help.”
SMH Wills & Probate can be contacted on 01142 664 432 or info@smh.group
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