Working out if you need to pay Inheritance Tax (IHT) is an essential, yet confusing, part of the probate process.

With the IHT freeze, which was announced in the Autumn Statement, you need to be mindful that more estates will be liable to pay IHT in the future.

When is Inheritance Tax due?

IHT is a tax on the estate (which includes property, money, and assets) of someone who has passed away.

If you are applying for probate, you will need to ensure that any IHT due is calculated correctly and paid to HMRC on time.

The IHT Nil-Rate Band is set at £325,000 per person. Any unused amount of the IHT Nil-Rate Band from a spouse or civil partner can be transferred to a surviving partner meaning that, in some circumstances, an estate has a Nil-Rate band of up to £650,000.

The Residential Nil-Rate Band of £175,000 allows your total allowance to be extended to £500,000 where the main property is passed to direct descendants.

Similar to the main IHT Nil-Rate Band, any unused amount of this relief can be passed to surviving partner – meaning estates could pass on up to £1 million tax-free.

You will be liable to pay IHT if the estate you inherit surpasses the threshold relevant to your circumstances.

How will the threshold freeze have an impact?

The Chancellor recently announced that the IHT thresholds will remain the same until 2028.

The thresholds were expected to increase from 2026, so the point at which you pay IHT will be the same for an additional two years.

When taking into account the potential rises in property prices and inflation, this could have a serious impact on your IHT liability.

Even if the content of the estate itself doesn’t change, the value could be tipped over the threshold.

Will this affect the probate process?

The process of calculating whether you owe Inheritance Tax will remain unchanged.

However, if you underestimate the value of the estate or haven’t reviewed your Will or tax planning for some time, you might find that you face paying a higher tax bill than previously anticipated.

For this reason, it is vital to conduct a thorough valuation of the estate.

If you need support with the probate process, contact our team today.