Inheritance tax loan

marc3

I dont lose sight of fact that medium term i an probably grateful for most likely inheriting a bit of money, but short term -causes major headache as no money to pay inheritance tax which has to be paid 6 months post death and before can receive any money from the estate  ,which is probably 12 months hence
only choice seems to be an IHT loan.(i am sole beneficiary but no will so it all takes about a year to sort /letter of administartion application etc etc 

I have no experience of inheritance tax loans.

can anybody offer guidance/recommendation of good/bad providers -or viable alternatives (dont seem to be any as HMRC seem totally inflexible .

thoughts /guidance appreciated

thank you 

MattMattMattUK

marc3 said:

I dont lose sight of fact that medium term i an probably grateful for most likely inheriting a bit of money, but short term -causes major headache as no money to pay inheritance tax which has to be paid 6 months post death and before can receive any money from the estate  ,which is probably 12 months hence
only choice seems to be an IHT loan.(i am sole beneficiary but no will so it all takes about a year to sort /letter of administartion application etc etc 

I have no experience of inheritance tax loans.

can anybody offer guidance/recommendation of good/bad providers -or viable alternatives (dont seem to be any as HMRC seem totally inflexible .

thoughts /guidance appreciated

thank you 

First question is when is the six month deadline, there is no reason you could not get everything wrapped up in six months provided the estate is not hugely complicated even without a will, or have you already run the clock down and think it will be another twelve months on top? HMRC are not flexible, the are required to collect tax due as per the legislation, you can choose to not pay them, but the interest rate is around 7.5% so fairly unfavourable, however from a quick look online IHT loans seem to be in the 6-9% range, plus a fixed fee and a percentage fee, so likely cheaper to just take the HMRC interest charge.

What kind of assets are within the estate that means that you cannot potentially liquidate some of them to pay the IHT bill? Thirdly what is the value of the estate, if it is only slightly over the £325k threshold then it may be easier for you as the executor to lend the estate the money, if it is significantly over then that is likely not a good option. 

Keep_pedalling

This is a duplicate thread, best to stick to the one you posted in the cutting tax board,

MEM62

marc3 said:

I dont lose sight of fact that medium term i an probably grateful for most likely inheriting a bit of money, but short term -causes major headache as no money to pay inheritance tax which has to be paid 6 months post death and before can receive any money from the estate  

You do not pay inheritance tax - the estate does.  

HobgoblinBT

From what I recall from my banking days Inheritance tax loans were secured on a Solicitors Undertaking.  Rarely did we advance monies for Inheritance Tax to executors action without a solicitor.

  As a first step I suggest speaking with your probate solicitor to see if they have any arrangements with banks that provide such facilities.  If you are not using a Solicitor for your probate application you may find yourself with fewer choices.

marc3

First question is when is the six month deadline, there is no reason you could not get everything wrapped up in six months provided the estate is not hugely complicated even without a will, or have you already run the clock down and think it will be another twelve months on top? HMRC are not flexible, the are required to collect tax due as per the legislation, you can choose to not pay them, but the interest rate is around 7.5% so fairly unfavourable, however from a quick look online IHT loans seem to be in the 6-9% range, plus a fixed fee and a percentage fee, so likely cheaper to just take the HMRC interest charge.

thanks for reply MMM .
was on the case on day 1.
there is no will-hence letter of admin application .
solicitor warned 8 months min and usually more as they always query things and you then go to back of queue .cant even apply for L of admin until hmrc have agreed the IHT account first .

good point re HMRC interest-can you clarify though.
I think you have to pay a min of 10% on month 6 .
that given- i thought you had to make further monthly payments to hmrc as opposed to letting the total balance after paying 10% accumulate interest .
If thats not the case-as you say-prob cheaper to just owe loads of interest (hopefully get sorted in a further 6 month max ) as opposed to paying slightly higher interest on a iht loan: but again,i thought unless you pay hmrc each and every month-they hang,draw and quarter you .
have i got that wrong ? 

retiredbanker1

OP You do not need a loan for Inheritance tax.

Bereavement teams with high street banks CAN advance funds from liquid assets in the estate if the executors ask.
A bankers cheque would be made out to HMRC.