Probate: Inheritance Tax

If the estate of the deceased has inheritance tax owed on it, which at current levels is set at 40% for estates worth £325,000 or more, then this is payable either in part or full before a 'Grant of Probate' will be issued.

The inheritance tax owed on a deceased's estate must be paid to HM Revenue and Customs within 6 months of the date the individual died, if it is not paid by this date then it is subject to interest increasing the amount payable by the beneficiaries of the estate. Some assets such as a house or business can be paid for in instalments.

After the inheritance tax has been paid, confirmation from HM Revenue and Customs is required so that grant of probate can be obtained and the process of administering the estate can move forward. If no inheritance tax is due to be paid, confirmation of this is still required from HM Revenue and Customs before grant of probate will be issued.

Inheritance tax is owed on the deceased's taxable estate; the taxable estate is the total of:

• All the assets that the deceased owned, land, houses, shares, savings.

• The share of any assets that were jointly owned.

• The share of any assets that pass automatically by survivorship.

• The estate does not include any liabilities or debts that might be due to creditors which will decrease the value of the deceased's estate.

In order to obtain the grant of probate you must be able to prove either that you have paid the correct amount of inheritance tax or that there is none to pay. This, as detailed above, is done through confirmation from the HM Revenue and Customs. The following is a list of ways to pay the inheritance tax owed on the estate:

Ways of paying inheritance tax:

• Pay inheritance tax from the deceased's bank account: It is possible to use a direct payment scheme to transfer the funds from the deceased's bank or building society account to cover the required costs in part or full.

• Pay inheritance tax using the deceased government stock: If the deceased had a government stock of some kind then these could be used to pay the costs.

• Pay inheritance tax using the deceased national savings: If the deceased had any form of national saving schemes, these savings can be used to pay the required costs of the tax.

• Pay inheritance tax by transferring heritage property: Although this method is rare, it is possible to off to pay the costs by transferring national heritage property to the crown.

• Pay inheritance tax from a joint account: Any money from a joint account you shared with the deceased can be used to pay the costs.

• Pay inheritance tax from your own funds: If the deceased has no money in any of the alternative methods above and money is still owed on inheritance tax the last resort would be paying money from your own account to cover the cost.

Although this is obviously a hindrance, if the inheritance tax is not paid in part or in full then you could be refused grant of probate and therefore be unable to continue with the process of estate administration.

I am a legal writer who specialises in probate, if you would like more information about inheritance tax and would like to find a solicitor, I suggest you have a look at lawontheweb.co.uk