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‘What is Probate? Do I need it? What about Inheritance Tax?’
Understanding what happens when a loved one passes away can be an overwhelming experience. Research conducted by the Estate Registry has revealed many people are confused by the Probate and Estate Administration process. Out of the 2,000 UK consumers questioned, 39% did not understand what would happen if they inherited something. This rose to 57% for those under the age of 35.
What Is Probate?
Probate is the legal process of administering someone’s estate after they die. A person’s ‘estate’ is made up of everything they owned at the time of death such as money, property, shares, investments, and personal possessions. Probate involves:
- Confirming the validity of the will (if there is one),
- Identifying and valuing the deceased’s assets,
- Paying off the deceased’s liabilities, including Inheritance Tax,
- Distributing the estate to the beneficiaries.
When do you need probate?
Whether or not you need probate depends on the size and complexity of the estate, and how assets were owned. For example, if assets were jointly held, they may pass automatically to the surviving joint owner. But where assets were in the deceased’s sole name, probate is usually required to access them.
To check if probate is needed, financial organisations who the deceased used, such as banks and building societies, would need to be contacted. Such organisations would then explain whether probate is needed to access the assets. There are no hard rules: each organisation has its own requirements.
Who can apply for probate?
This depends on whether the deceased died with or without a valid Will:
- If the deceased had a valid Will, the executors named in it can apply.
- If the deceased did not have a valid Will, or the named executors cannot act, the intestacy rules will determine who is entitled.
What is Inheritance Tax?
Inheritance Tax is a tax on the estate (the property, money, and possessions) of someone who has passed away. If someone owns assets jointly, their share of the asset’s value is included in the estate.
Every individual has a tax-free allowance to give away after they die, this is known as your “nil rate band” allowance. This is currently £325,000.
If an individual owns a property and is passing this to their children or their issue (grandchildren, great grandchildren etc.) then they get a maximum additional amount of £175,000 (limited by the value of the property).
Therefore, the maximum nil rate band an individual can get is £500,000.
There is no Inheritance Tax to pay when a person inherits from their husband or wife, whatever the value, due to spouse exemption. Any allowances that are not used up on the first death may be transferred to be used on the death of the surviving spouse. Therefore, a couple’s maximum nil rate band is £1,000,000.
Before applying for probate, the estate of the deceased needs to be valued. Even if the estate is below the nil rate band and thus, no Inheritance Tax is payable, you still need the value of the estate for the probate application.
Once the estate has been valued, and any Inheritance Tax has been paid, you can apply for probate online, or by post.
Inheritance Tax: Who Really Needs to Worry?
There is a common misconception that Inheritance Tax is only a concern for the wealthy. According to The Estate Registry’s research, a third of UK adults agree with that view. However, rising property prices are pulling more estates into the tax net.
Here are some key figures from HMRC:
- In the 2021–22 tax year, only 4% of UK deaths resulted in an Inheritance Tax bill—so fewer than 1 in 20 estates paid Inheritance Tax.
- Despite that, the total number of taxable estates rose to 27,800, with an average bill of £215,000. These range from a £13,500 liability for a net estate value of £300,000 up to a £3.91 million liability for an estate of £10 million.
- For estates worth between £1 million and £1.5 million, the average tax due was £325,000—a significant liability.
So even if you do not consider yourself ‘wealthy,’ the increase in average house prices should not be underestimated. The value of property alone can quickly push an estate above the Inheritance Tax threshold, especially in the South East and London.
A Complicated Process That Needs Simpler Solutions
The probate process can be confusing and slow. Research shows:
- 61% say the process takes too long,
- 25% believe it is hard to understand,
- 21% think more public information would help.
How We Can Help
Probate does not have to be very complex and difficult, but too often, clients do not know where to turn for help. As Phil Hickson of The Estate Registry rightly points out, “much better signposting is needed to steer consumers to the help available in explaining how the process works and in finding solutions to settling an Inheritance Tax bill that doesn’t only affect the rich.”
We are committed to being that guide — providing clarity, compassion, and practical solutions during what can be a very emotional and stressful time.
Here at George Green LLP, we have a dedicated and experienced Private Client team who can support you every step of the way — whether you are unsure if probate is needed, or you are facing an Inheritance Tax deadline. Our experienced team can:
- Determine whether probate is required,
- Guide you through the probate application,
- Help calculate and settle any Inheritance Tax due.
If you would like to discuss further, please contact the Private Client team at George Green LLP on 01384 410410 or complete our online enquiry form.