Probate and House Sale (Scotland)

[d0nnyoz]

A quick enquiry about probate and the sale of the house, and the tax payable for dealings in Scotland (I actually live in England).

A family member has recently passed away in Scotland the children of that person are now settling up the estate. The main asset is the house which needs to be sold.
One of the family members has apparently been advised that the estate of the deceased needs to be estimated for HMRC purposes and any tax liable needs to be paid BEFORE the sale of the house?
My initial thought is that this is not true as I have had knowledge of two similar events occuring in my neighbourhood and the offspring, although liable for the inheritence tax, were unable to pay it until the house was sold, which they duly did.

Is the law different in Scotland for this scenario?
Can anyone offer some advice on how this process works?
Does the tax liability need to be settled before the sale of the main asset?

[sederunt]

No Grant of Probate in Scotland, instead Grant of Confirmation.

If the deceased was the sole owner, there will be a need to obtain a Grant of Confirmation to enable the house to be sold.

If IHT is payable, then IHT generally needs to be paid before Confirmation will be issued. Either that or an agreement entered into with HMRC such as a grant on credit or paying by installments - (and then interest payment is a factor to be considered).

[d0nnyoz]

Thanks for the response.
Seems a bit ridiculous that HMRC requires IHT payment BEFORE the sale of assets as it could be a lot of money! The IHT bill for the estate I am thinking about could be £40k! How do they expect individuals to simply pay that from their own coffers!?

[sederunt]

I believe that HMRC brought in the Grant on Credit scheme to offer an alternative to the situation whereby executors were taking out commercial loans to pay IHT. But I do not know how accessible tthe HMRC scheme is.

[PallasAthena]

A long-standing gripe from family members acting as Executors but HMRC remain insistent they want their IHT cash before Probate/Confirmation can be granted. They probably suspect (perhaps with some justification) that once a property is turned into cash the executors/beneficiaries might prove hard to track down...

At one time they suggested Executors took out a loan to pay IHT! They've recognised the unreasonableness of that and HMRC do now have payment on credit plan to postpone paying (most of) the IHT until the property is sold.

https://www.gov.uk/guidance/applying...nheritance-tax

There's also a separate 'Instalments' plan useful when executors/beneficiaries want to keep the property and not sell it.

Pay your Inheritance Tax bill: In yearly instalments - GOV.UK

You (the Estate) have to pay interest of course.