Tower Street Finance has launched an Inheritance Tax (IHT) Loan to help the thousands of families each year whose inheritance is locked because they can’t pay the tax bill.
It sits alongside its Interitance Advance product, which recently won Innovation of the Year at the British Wills and Probate Awards, and, just like that product, the IHT Loan carries no risk, there’s no personal liability and no monthly repayments.
The IHT Loan provides a solution when estates are effectively ‘locked’ because the Executor needs to pay the IHT to apply for the Grant of Probate, but needs the Grant to realise the assets to pay the IHT.
It is taken out by the Executor (or Personal Representative if there is no Will) and the money is used to pay HMRC directly providing a no risk way to meet the tax liability and unlock the estate without taking out a personal loan or bridging loan.
It’s estimated around £2bn is unavailable to beneficiaries every year because the Executor of the Will doesn’t have the funds to pay the average IHT bill of £200k.
The IHT Loan has the same unique features as Inheritance Advance:
Tower Street Finance MD Andrew Bartle said: “Our IHT Loan provides a lifeline for people who are facing a huge tax bill when a loved one dies.
“It’s a catch-22 for thousands of families each year, they can’t access their legacy until the tax bill has been paid but they don’t have the money to pay it until they’ve received their inheritance.”
The loan is treated as a testamentary expense and is repaid from the estate funds once the Grant of Probate has been issued. There’s a 2 per cent origination fee (capped at £1,500), which can be added to the loan, and a yearly interest rate of 19.6 per cent. Interest roll up is capped at 30 months.