Daniel Watson examines the lengthy delays in processing probate and the need to extend the IHT loss relief window in eprivateclient

Daniel’s article was published in eprivateclient, 31 March 2023, and can be seen here.

Daniel Watson, Associate in our Private Client department, highlights the growing concern surrounding delays in the probate process and their impact on Inheritance Tax (IHT) relief.

The COVID-19 pandemic exacerbated existing pressures on the Probate Registry, which was already undergoing structural changes. Despite some signs of improvement, many applications still exceed the expected processing times, with paper applications now taking over 20 weeks on average.

These delays are often worsened by administrative errors or missing documentation, and any queries raised by the Registry can push applications further back in the queue. As a result, executors of all but the simplest estates face significant challenges in obtaining a Grant of Probate within a year of death.

This has serious implications for IHT loss relief on quoted investments. Currently, executors can claim relief if investments are sold at a loss within 12 months of the date of death. However, due to probate delays, many are unable to sell assets within this timeframe, risking the loss of valuable tax relief.

Daniel argues that the 12-month window is outdated, having been set when probate applications were processed in just a few weeks. He supports calls to extend the relief period, ideally to two years, or at least 18 months, to reflect current realities and align more closely with the four-year window available for land sales.

Without such reform, beneficiaries may continue to miss out on significant tax savings.

Read the full article on the eprivateclient website [external link].