UK Simplifies Inheritance Tax Probate Rules

Tax-News.com, London

31 March 2003

A streamlined new approach to paying inheritance tax and obtaining the grant of probate will start today, Monday 31 March, Paymaster General, Dawn Primarolo announced last Friday. Electronic transfer from participating financial institutions direct to the Revenue will do away with the need for administrators to obtain funds from outside the estate in order to secure a grant.

Until now, IHT generally had to be paid before executors could get access to the assets of an estate. Often they have to borrow the necessary money before probate (confirmation in Scotland) goes through. Understandably, many banks and building societies have been unwilling to release funds in advance of legal formalities being settled for fear of paying to unauthorised persons.

Ms Primarolo said, "For a long time personal representatives have wanted access to funds already held in the deceased's account to pay the IHT bill. Financial institutions in turn have had concerns about releasing funds without appropriate authority. This new scheme addresses both these issues and is fully endorsed by Government. It will be widely welcomed and we hope to see maximum take up."

The Government says it hopes that the arrangements are straightforward and will work with the minimum of bureaucracy. Personal representatives will get the necessary forms and guidance as part of their basic package of material for the IHT amount (IHT200). If they want to take advantage of the direct payment facility they will initiate it as part of the process of completing the account.

The announced changes follow agreement between the Revenue, the British Bankers' Association and the Building Societies' Association.

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