What you need to know about IHT and probate applications

If you have been left to deal with a loved one’s estate, you will likely have numerous financial and legal responsibilities to manage while you are grieving. It can be tempting to try and complete the probate application yourself, but even the smallest mistakes can cause delays. The process is set to become even more complex due to upcoming Inheritance Tax (IHT) reforms, so it’s important to seek professional advice.

Before applying for probate

After someone dies, a personal representative will be responsible for administering their estate. If they have left a Will, this personal representative will be the named executor. If there is no Will, a close relative will usually become the administrator as per the rules of intestacy.

Before an application for probate can be submitted, the executor or administrator must first calculate the total value of the estate to ascertain the IHT liability. This involves identifying all assets that the deceased person owned and any debts they owed. To establish the date-of-death value, you will likely need to contact several organisations, including banks, insurance companies, pension providers and more.  

Based on this information, you will then be able to determine whether the estate qualifies as an excepted estate or if a full IHT account is required.

Many estates can be treated as “excepted estates”, meaning a full Inheritance Tax account is not required. Broadly, these include:

• estates that fall below the available Inheritance Tax thresholds;
• estates that benefit from exemptions, such as transfers to a spouse, civil partner or charity; and
• certain estates where the deceased’s residence, domicile or asset profile meets the relevant eligibility criteria.

If an estate does not qualify as an excepted estate, a full Inheritance Tax account (usually form IHT400 and supporting schedules) will generally be required.

There is little room for error

Even where it is an excepted estate, you will still be required to declare certain financial information, including:

• The gross value of the assets for which probate is required
• The net value of the assets for which probate is required
• The value of everything in the estate
• The value of everything in the estate minus the debts in the estate
• The amount of the estate on which inheritance tax is payable.

Although these values may appear straightforward, understanding exactly what should and should not be included can be challenging without specialist knowledge. If information is missing, inconsistent or incorrect, the Probate Registry may issue further enquiries or stop the application altogether. This can significantly delay the grant of representation, preventing executors from administering the estate as swiftly as possible.

The typical timeframe

If Inheritance Tax is due, it must generally be paid within six months of the date of death. Interest begins to accrue on any outstanding tax after this point.

Before a probate application can proceed, HMRC will normally need to issue an Inheritance Tax receipt confirming that the correct amount of tax has been paid. Without this receipt, the Probate Registry cannot issue the grant of representation.

Where a full IHT400 is required, it must usually be submitted within 12 months of the date of death. Missing this deadline without a reasonable excuse can result in financial penalties. If you have paid more IHT than the final bill says the estate owes, HMRC will refund the excess after you’ve been given probate.

Executors must also keep all supporting documents used to prepare the Inheritance Tax return, as HMRC may request evidence even after probate has been granted.

Changes to pension rules

From April 2027, most unused pension funds and pension death benefits will be included within a person’s estate for Inheritance Tax purposes. This means executors will have another category of assets to identify, value and report before submitting an application. According to government estimates, around 10,500 estates are expected to become liable for Inheritance Tax for the first time as a result of these changes, while approximately 38,500 estates will pay more Inheritance Tax than they would have previously. It is therefore likely that more people will need to fill out a form IHT400.

The importance of professional advice

If you are an executor, you are personally and financially responsible for any mistakes made during probate. Consulting a specialist solicitor from the outset can make the entire process smoother and less stressful during an already difficult time.

If you would like to discuss this further with us, please contact our Wills, Trusts & Probate team by email at privateclient@attwaters.co.uk or by telephone on 0330 221 8855.