Funding inheritance tax
Funding inheritance tax

The following Wills & Probate guidance note provides comprehensive and up to date legal information covering:

  • Funding inheritance tax
  • Sources of funds
  • Assets not requiring a grant
  • Banks or bank loans
  • Building societies
  • Beneficiaries
  • Payment of IHT from qualifying National Savings and Investments funds
  • Government Stock
  • Inheritance tax direct payment scheme
  • The Court of Protection
  • more

Sources of funds

Make arrangements for funding inheritance tax (IHT) early so that funds are available as soon as the grant is ready to be lodged.

Possible sources are:

  1. assets not vesting in the personal representatives (PRs)

  2. assets not requiring a grant

  3. banks or bank loans

  4. building societies

  5. beneficiaries

  6. certain funds with National Savings & Investments (NSI)

Assets not requiring a grant

The executors may be able to sell these to produce cash for payment of IHT. A grant is not needed to pass chattels; this is achieved by delivery coupled with the necessary intention. Under Stock Exchange rules an executor can sell quoted shares before the grant is issued, subject to an undertaking being given.

Banks or bank loans

The deceased’s bank may agree to release funds from the deceased’s account to pay IHT or the PRs may apply to any bank for a loan.

A bank’s terms will be negotiable and usually require:

  1. a summary of the assets and liabilities in the estate before considering a loan to pay IHT

  2. an undertaking from the PRs to account to it from the first proceeds of the realisation of the estate assets once the grant has been obtained

The bank may require an undertaking from the solicitor acting for the PRs. The solicitor should obtain an irrevocable authority from the