Understanding HMRC’s grant on credit: A guide for executors

Dealing with the financial side of a loved one’s estate can feel overwhelming, especially when faced with complex legal processes and inheritance tax (IHT) payments.  One of the biggest challenges executors face is that IHT often needs to be paid before you can access the deceased’s assets.  This can create a difficult situation, especially if the estate does not have cash readily available.  But what options are available to the executors in these circumstances?

One answer may lie in HMRC’s ‘grant on credit’ process. In 2024, HMRC made some important changes to simplify this process, making it easier for executors to apply for the Grant.  This was prompted by long delays at the Probate Registry (the branch of HM Courts & Tribunals Service responsible for granting legal permission for executors to access and distribute an estate) which continue to cause frustration and potentially leave an estate in limbo for months.

The following is a break down of how the grant on credit works, how probate delays might affect the estate, and how we can help navigate the process on your behalf.

What is the HMRC Grant on Credit?

When someone passes away, their estate (which includes property, money, and possessions) may be subject to IHT.  Normally, IHT has to be paid before the Grant is issued by the Probate Registry.  This helps HMRC ensure the tax is paid promptly.

But what happens if there is not enough cash within the estate to draw on to cover the IHT up front?  This is where HMRC’s grant on credit may be available.

A grant on credit allows the executors to obtain the Grant from the Probate Registry even if the IHT due has not been paid.  HMRC essentially grants a temporary approval, giving time for assets to be sold, or accessed, and for the IHT to be settled later.

What changed in 2024?

In response to increasing Probate Registry delays and financial difficulties faced by executors, HMRC introduced key improvements to the Grant on Credit Scheme:

• Easier eligibility – the process is now available to more estates, with fewer restrictions and complex requirements.
• Faster approvals – HMRC has streamlined applications, reducing delays in getting the grant on credit.
• More flexible repayments – instead of demanding full payment quickly, HMRC now offers more varied repayment options.

The changes aim to allow executors to manage estates more effectively without being trapped by financial roadblocks.

Why are probate delays a problem?

Probate delays have become a major issue in recent years with applications taking months to process. This backlog can cause significant problems for executors and beneficiaries, particularly when IHT is due but estate assets remain inaccessible.

If probate is delayed:

• Executors may struggle to pay IHT on time, incurring substantial interest on late payment.
• Beneficiaries might be left waiting for their inheritance.
• Property sales or other estate transactions may be put on hold.

By making the grant on credit more accessible, HMRC acknowledges these challenges and provides a safety net for those caught up in delays.

How can you pay IHT before probate?

There are other options which may be available for executors to pay IHT before probate is granted, including:

• Using the deceased bank account – some banks allow IHT payments to be made directly to HMRC from the deceased account without probate.
• Taking out an executor loan – some lenders offer short term loans to cover IHT, although these can be expensive.
• Personal contributions – family members or executors may choose to pay IHT themselves with a view to being reimbursed later.

If none of these options are viable, applying for a grant on credit can help bridge the gap to allow the executors to proceed with the probate application.

What executors need to know

If you’re an executor handling an estate and unsure what to do next, do get in contact.  Our Estates Team are experienced and approachable and can assist with the following key points:

1. We can check if the estate qualifies for a grant on credit – with the new 2024 rules it is easier to apply, however, certain information will still need to be provided to HMRC.
2. We can advise regarding probate delays – unfortunately, delays are still common. We can help manage the expectations of the beneficiaries and advise on options to unlock cases which have stalled.
3. We can explore funding options early – if IHT is due we can advise regarding funding before deciding if a grant on credit is necessary.
4. We can maintain communication with HMRC – keeping up to date with the application status and any outstanding requirements can help avoid unnecessary holdups.

Above all, seek professional advice.  Probate and IHT can be complicated and speaking with a solicitor can help make the process smoother.  We can manage expectations and keep stress to a minimum.

Final thoughts

Handling probate and IHT can be daunting, especially when you’re also dealing with the emotional impact of losing a loved one. However, with our help and HMRC’s improved grant on credit system, executors now have more options to ease financial pressures while waiting for a Grant.