Grant of Probate and payment of IHT - confused :(

Icey77

Could someone explain the steps involved in getting the grant of probate and paying the IHT?

I'm getting confused in that it seems we can't get the funds released by the bank to pay the IHT until we get the grant of probate but reading various websites it seems you can't get the grant of probate until the IHT has been paid?

Seeing as the IHT bill is likely to be £100,000 plus we personally simply don't have this kind cash available (or even access to this kind of cash!) to fund the IHT when the funds are sitting there in the bank account of DH late uncle

Many thanks!

antrobus

If inheritance tax is due, you can't get probate until you've handed over the money.

HMRC makes these suggestions;

http://www.hmrc.gov.uk/inheritancetax/paying-iht/find-money-to-pay/

or you can pay by installments in some circumstances;

http://www.hmrc.gov.uk/inheritancetax/paying-iht/yearly-instalments/

but it's sometimes the case that the executor simply has to borrow the money.

dzug1

That HMRC site suggests that many banks will pay HMRC direct without waiting for Probate

Bad luck if yours is not one of them.

Icey77

Ok, think I've got that bit, thanks

At what point is the declaration made? After you have paid some or all of the IHT?

How long does it take for the Grant of Probate to be given once the IHt is paid?

Thanks

John_Pierpoint

In my case I paid the £100,000 IHT at the end of March, out of my own pocket (6 whole months after the death it starts accruing interest, and like a credit card it becomes more difficult to clear the account) in an attempt to speed up the process and avoid delays & charges caused by introducing third parties into the transaction.

I paid the cheque over the counter into HMRC's bank account on 31st March AFTER getting my HMRC account reference established in advance.
[My then Mickey Mouse bank could not organise the transfer without flaffing about clearing funds and taking a week, in the immediate post financial crash period the funds were earning 5% - I make that calculation £13 a day, just in interest].

The delays were mainly caused by the HMRC "black hole" [their description] and may well have been linked to a decision to refer my house valuation to the VOA.

The probate court (central London) kept me waiting about 3 weeks (I thought they had lost the will); though previous experience at Lincoln was more prompt.

The probate certificate took several days to arrive and it is dated 1st June

Perhaps I was just unlucky ?

nom_de_plume

In the probate I'm currently dealing with there is sufficient monies in savings to cover the IHT. I have submitted form IHT423 to the banks to pay the IHT direct. As the OP appears to be in a similar situation that should work for them too.

Within days of sending off IHT400 I had a tax bill for part of the IHT - in this case covering 2 properties that form part of the estate. This also had a statement showing one of the banks had already transfered the funds.

One bank wrote asking for a death certificate despite me previously taking it into their local branch but other than that I've just had letters acknowledging that payments will be made.

nom_de_plume

Icey77 wrote: »

Ok, think I've got that bit, thanks

At what point is the declaration made? After you have paid some or all of the IHT?

How long does it take for the Grant of Probate to be given once the IHt is paid?

Thanks

Just to elaborate on my last post, I sent off the forms IHT400 and IHT421 to HMRC, form PA1 to the Probate Registry and a raft of IHT423's to the various banks (you need one of these for each account not just one for each bank) all at the same time.

It's now a couple of weeks since submitting these and I've had the communication in my post above from HMRC, the paperwork for making an appointment for swearing an oath (did that the same day for £7 at a local solicitor's office) and letters confirming payments to be made from the various banks.

In my case it appears the swearing of the oath (which I assume is what you mean by declaration) appears to have been made prior to the confirmed receipt of IHT and presumably therefore as a response to my application to the court. I believe the grant of probate will not be issued until the form IHT421 is 'rubber stamped' by HMRC and forwarded to the court. Again I presume this will not happen until HMRC are satisfied my figures submitted for the value of the estate are indeed correct.

troubleinparadise

I believe the grant of probate will not be issued until the form IHT421 is 'rubber stamped' by HMRC and forwarded to the court. Again I presume this will not happen until HMRC are satisfied my figures submitted for the value of the estate are indeed correct.

I submitted IHT400 asking HMRC to check it (one of the options). I paid the IHT (part direct payment from Executor's account, part loan) owing according to my calculations, and I was then granted probate.

Some weeks later I received a letter from HMRC to say that they were checking out the house and shareholding valuations. In the meantime I continued with Probate using the Grant, and made an interim residual beneficiaries payment, keeping back some residue.

After about 4 months I received another letter from HMRC to say they were happy with the valuations, but that I had claimed an exemption I shouldn't have done and could I please pay additional IHT. They were correct, my error, I paid, no penalty, all cleared.

(Well, there is a double taxation issue to still sort out, I will tackle that when it arises! But so far HMRC have been very helpful, and tolerant of my lack of expertise in the world of IHT etc)

Icey77

Wonderful, many thanks!

Currentlty we are waiting for HMRC to reply to our submission of the R27 - which it would appear they have lost! HMRC has a record of the form arriving with them but nothing else

Once we have that back (in about 3-4 weeks!) we can finish the IHT400 form and start the submission process. It looks like we will be able to part pay some of the IHT from one of the bank accounts and then once we ahve the Probate certificate we can pay the remainder.

John_Pierpoint

Good luck everyone.

My last probate ran into just about all the pitfalls imaginable, starting with discovering that the will created a "partial intestacy" situation. But with the help of the MSE community, I managed to get everything sorted out in about 18 months, including selling the house.

troubleinparadise wrote: »

.

(Well, there is a double taxation issue to still sort out, I will tackle that when it arises! But so far HMRC have been very helpful, and tolerant of my lack of expertise in the world of IHT etc)

There seem to be some irrationality about the handling of income that has been accrued but not paid as at the date of death - if the beneficiaries are additional rate tax payers there is (was ?) some Income Tax relief that could be claimed.

Icey77 wrote: »

Wonderful, many thanks!

Currentlywe are waiting for HMRC to reply to our submission of the R27 - which it would appear they have lost! HMRC has a record of the form arriving with them but nothing else

Once we have that back (in about 3-4 weeks!) we can finish the IHT400 form and start the submission process. It looks like we will be able to part pay some of the IHT from one of the bank accounts and then once we ahve the Probate certificate we can pay the remainder.

In my case the income tax was in a shambles, because the deceased had availed himself of some untaxed interest at 5% for his nest egg, but that had put him into the zone where pensioners pay 30% tax and the attempts to recover the unpaid tax via adjustment of the PAYE code were never going to work.

Now that the R27 appears to have been computerised, there may be a better chance of getting the income tax sorted out correctly.

I went ahead and got probate without sorting out the income tax mess.

[At the time through a mixture of a freedom of information request and a parliamentary committee investigation, it emerged that the deceased had the bad luck to have his PAYE pension paid via a tax office with a backlog of 150,000 items of unanswered (opened?) mail, hopefully the income tax situation is more up to date now].

troubleinparadise

My double taxation is to do with overseas assets, but fortunately (!) in a country with a treaty with the UK - but it does mean additional work to deal with both tax, currency rates at differing dates, etc etc, etc...

I have become an armchair expert in things I never thought I would need to know about, let alone wanted to! But these days it is all too quickly forgotten ;-)) .... where did I put that paperwork?