Inheritance Tax Loans and Estate Funding
How an Inheritance Tax Loan Works
An inheritance tax loan pays the IHT owed to HMRC so that the Grant of Probate can be applied for. Once probate is granted, the estate’s assets are released and the loan is repaid from those funds. Because it is repaid from the estate rather than by you personally, there are no monthly repayments during the term.
These products are regulated credit. Bridging Finance 4U does not arrange them: we introduce your enquiry to Discount Mortgages Limited, which arranges them with specialist lenders. We may receive a fee for the introduction.
Benefits of an Inheritance Tax Loan
- Assessed on the estate, not your credit rating
- No monthly repayments
- No requirement for a Will
- No personal liability, subject to the lender's terms
- No charge over your own property
How can an inheritance tax loan help avoid probate delays?
If you need help settling an IHT bill, arranging the funding can be expensive and time-consuming. Until the IHT is settled, you can’t obtain the Grant of Probate and the estate cannot progress to distribution. This creates “locked” estates that cannot move forward until the IHT has been paid.
An Inheritance Tax Loan can prevent your estate becoming locked by enabling you to settle the IHT bill quickly, helping you avoid delay or penalty charges from HMRC.
Who can apply for an inheritance tax loan and how does it help executors?
An IHT loan is available to executors and personal representatives who need to pay UK inheritance tax. Applications are assessed mainly on the value of the estate rather than your personal income or credit rating, and there are no monthly repayments, so you can apply whether or not you own property.
How can I get an advance on my inheritance?
An inheritance advance lets a beneficiary access up to 60% of the sum due to them from the estate. There are no monthly repayments: the advance, interest and fees are repaid in one sum from your inheritance when it is released.
What can you use an Inheritance Advance for?
If you’re waiting for an inheritance to come through, it can sometimes be a long, drawn-out process. On average it takes a year to gain access, and in some situations that may be too long to wait – especially if you need to deal with pressing financial concerns. An advance gives you the option to receive some of your inheritance early, and the funds can be used to help with all manner of things, such as:
- Can I use my inheritance advance to finance home improvements?
- Can inheritance advances be used for holidays or travel?
- Can I buy a new car with an inheritance advance?
- Is it possible to put down a deposit on a house using inheritance funds?
- Can an inheritance advance help cover medical, veterinary, or education costs?
What are the key benefits of an Inheritance Advance?
- Assessed on the estate, not your credit rating
- No monthly repayments
- No requirement for a Will
- No personal liability
- No charge over the property
- Available pre Grant of Probate
Inheritance tax loans, also known as IHT loans or executor loans, help executors pay inheritance tax when it is due before the estate’s assets can be sold or released. Settling the bill on time keeps probate moving and avoids HMRC interest on late payment. The loan is repaid from the estate, so executors can deal with the tax without funding it themselves.
Let’s talk about how we can help you…
If you are an executor facing an inheritance tax bill, or a beneficiary waiting on an estate, get in touch. We’ll pass your enquiry to Discount Mortgages Limited, who will explain your options and the full costs before you commit to anything.
Inheritance Tax Loan FAQs
What is an inheritance tax loan?
An inheritance tax loan is short-term funding that pays the HMRC inheritance tax bill on an estate before probate is granted. Because IHT usually has to be paid before the Grant of Probate is issued, and before the estate's assets can be released, the loan breaks that deadlock. It is repaid from the estate once the assets are released, so there are no monthly repayments.
Why do I have to pay inheritance tax before probate?
HMRC generally requires inheritance tax to be paid before it issues the Grant of Probate, but the money to pay it is often tied up in the estate that probate would release. This creates a "locked" estate. An IHT loan settles the bill so probate can go ahead and the assets can be distributed.
How much can I borrow?
Typically up to 60% of the value of the estate, or of the inheritance due to you. The exact amount depends on the estate's assets and the lender's criteria.
Do I need to have been granted probate first?
No. The funding is designed to be taken out before probate, so it can pay the IHT that unlocks the process. The estate usually needs to be handled by a professional firm, such as a solicitor, that the lender approves.
What does it cost?
Costs depend on the lender, the amount and how long the funding is outstanding. Interest and fees are usually added to the loan and repaid from the estate at the end. Discount Mortgages Limited will give you the full costs, including the APR, before you decide whether to go ahead.
Will my credit rating or income be checked?
Lenders assess these applications mainly on the value of the estate rather than your personal income or credit rating. Each lender has its own criteria, so this will be confirmed when your application is assessed.
Who repays the loan?
The estate repays it. Once the estate's assets are released, the loan, including interest and fees, is repaid from those funds before the remaining inheritance is distributed.
Who arranges this funding?
These products are regulated credit, so Bridging Finance 4U does not arrange them. We introduce your enquiry to Discount Mortgages Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 811548) and arranges the funding with specialist lenders. We may receive a fee for the introduction.
Ready to Get Started
Tell us briefly about the estate and what the funding is for. With your agreement, we’ll pass your enquiry to Discount Mortgages Limited, who will come back to you with your options.
