Lengthening delays in processing probate applications are causing difficult repercussions for bereaved families, including their ability to claim Inheritance Tax (IHT) share loss relief; along with other impacts such as a decline in the value of assets, additional costs and property sales falling through.
Impact on share loss relief
IHT share loss relief can be claimed on ‘qualifying investments’, that were part of the deceased’s estate, and are then sold at a loss. Qualifying investments include general shares or securities listed on a recognised stock exchange, or holdings in authorised unit trusts.
IHT must be paid before making the grant of probate application and typically most investments cannot be sold until probate has been granted – this often means there can be significant fluctuations in the value of the shares at the date of death and the actual value when sold.
To make a claim for this relief, the disposal of qualifying investments must have been made within twelve months of the date of death.
Frequent delays of over a year to obtain a grant of probate means this valuable IHT relief is no longer available for a growing number of estates.
Rising costs and interest
Inheritance Tax must be paid by the end of the sixth month after the date of death, after this date interest will start to accrue on any unpaid IHT. For example, if the deceased passed away in January, IHT is due for payment by 31 July.
Probate will not be granted until the Probate Registry has confirmation from HM Revenue & Customs that the IHT liability has been settled. Executors may need to look at other solutions such as commercial lending or releasing funds from life assurance policies to cover the IHT liability, prior to having access to an estate’s assets.
Paying the IHT in instalments can sometimes be an option (depending on the type of assets within an estate) but interest is charged on the outstanding IHT liability – ultimately reducing the value of the estate.
Property sales falling through
Without a grant of probate, families are also left at an impasse, unable to access money held in the deceased’s bank account or sell any property. House sales can collapse if buyers are no longer willing or able to wait for the probate to be granted for the sale to progress.
Why the delays?
HM Courts & Tribunals Service (HMCTS) has published statistics highlighting the discrepancy between the number of probate applications received and the grants of probate issued. Between April 2022 and March 2023, 297,623 probate applications were made, whilst only 267,399 grants of probate were issued.
It is thought the increase in delays, particularly affecting more complex probate applications, could signify a shortage of experienced staff. The majority of probate applications are made online, a method that naturally adopts a more standardised approach, therefore any applications that are too complex for the system trigger a longer processing time.
Minimising delays – how M+A Partners can help
M+A Partners are able to help with the process of applying for probate, completing the Inheritance Tax return, calculating the Inheritance Tax liability and administering the estate.
Seeking professional advice reduces the possibility of a probate application being delayed.
Our experienced probate team ensure the application is accurate and complete from the outset. This avoids delays further down the line – there will be no need for HMCTS to pause an application due to missing or deficient information.
For any concerns over the current delays to issuing grants of probate, and advice that may mitigate the cost of these delays, please get in touch with one of our experts.