HMRC has relaxed some of the prohibitive conditions associated with applying for a grant on credit. The new guidance, effective from 1 April 2024, means that personal representatives (PRs) of estates will no longer need to have sought commercial loans to pay Inheritance Tax (IHT) before applying to obtain a grant.

Finding the Money to Pay Inheritance Tax

To summarise the background to why a PR may need a grant on credit – the law stipulates that all or part of the IHT due on the deceased’s estate must be paid before a grant of probate can be obtained. This payment is due by the end of the sixth month after the person’s death.

As a grant of probate is a prerequisite for accessing the deceased’s assets, the requirement to settle the IHT bill upfront can result in a scenario where there are simply insufficient liquid assets to do so.

When You Can Apply for a Grant on Credit

If accessing assets in the deceased’s estate proves challenging before probate is granted, you can apply to HMRC to issue a grant on credit.

Previously, to obtain a grant on credit, PRs must have been able to prove that

  • It is impossible to raise all the funds needed to pay the IHT; and
  • It can be shown that they have made every practical effort to raise the funds – this would have included evidence of trying to obtain a commercial loan.

However, from April of this year, there is no longer a need to demonstrate to HMRC that a commercial loan has been sought before applying for a grant on credit.

If HMRC Agree to a Grant on Credit

If a grant on credit is approved, HMRC will allow either all or part of the IHT and interest due to be postponed until after the grant of probate has been issued – enabling PRs to realise the assets to settle their tax bill.

While a grant on credit provides temporary relief, applicants are still encouraged to pay as much of the IHT as possible before receiving the grant. Upon approval, individuals will be required to sign a legally binding undertaking to repay the tax within an agreed timeframe.

Interest Charges and Notice of Inheritance Tax Charges

It is important to note that failure to pay the IHT by the due date may result in interest charges. Additionally, HMRC reserves the right to place a ‘notice of the Inheritance Tax charge’ against any land or buildings in the estate, ensuring transparency in the transaction process.

The change to the requirements for a grant on credit aims to provide a lifeline for individuals navigating the complexities of IHT payments on a deceased’s estate. However, although the high interest rates of commercial loans can now be bypassed, unpaid IHT is still subject to the current 7.75% interest rate, and the longer the process takes to grant probate, the more costly it becomes.

How M+A Partners can help

Should you have any queries regarding applying for a Grant on Credit, please get in touch with our experts or email

Our experienced Tax team can provide professional advice to ensure your tax affairs are accurate and up to date.