HMRC have announced changes to the probate application process, which has taken effect as of 17th January 2024.
Our Wills, Trusts, and Probate team explore what the issues were with the previous probate application process and what the new process entails.
What was the previous probate application process?
Prior to this date, the process for personal representatives applying for probate (where you need to submit an Inheritance Tax form known as the IHT400) required HMRC to send a stamped IHT421 form (the Probate Summary) to the probate registry to allow the application for probate to proceed.
When the personal representatives sent the IHT400 and IHT421 to HMRC, they then had to wait until the probate registry had received the stamped IHT421 before submitting their application for probate, which was usually 20 working days.
This process was causing delays, for example where an applicant prematurely submitted the probate application to the probate registry before HMRC had sent the stamped IHT421 (and not waiting the recommended 20 working days), causing the probate registry to stop the application.
HM Courts and Tribunals Service (HMCTS) has estimated that 9000 “stops” in 2022 were due to IHT400 forms being submitted incorrectly.
HMCTS has stated that it can take more than double the amount of administrative time to issue a grant once the application has been stopped.
When applications are stopped, they are moved to a separate queue for processing whilst the relevant information or documents are awaited.
What were the problems with the old probate application process?
Having to deal with the death of a loved one is already a difficult time, and often, families try to deal with the estate administration as quickly as possible to keep busy as a way to cope with their loss and to help them move on, but there can be unfortunate consequences of delayed probate applications which have been stopped due to premature submissions.
For example, where there is a property in the estate in the process of being sold, a delay in obtaining the grant of probate could lead to the sale falling through where buyers are not prepared to wait, perhaps due to the expiry of fixed rate mortgage offers in times of increasing interest rates which means future repayments could no longer be affordable.
If there is an existing mortgage on the property, additional interest will be due whilst the grant and completion of the sale of the property is awaited which will lead to the beneficiaries receiving less inheritance than if the property was sold sooner.
What is the new probate application process?
The new process still requires the personal representative to send the IHT400 form to HMRC.
However, now you must wait to receive a letter including a specific code from HMRC with the gross and net values of the estate.
You can then submit the code and values on the HMCTS online portal before you submit your online or paper probate application.
HMRC has provided new forms via the government website, which include boxes for you to include the specific code and the values from the letter you will receive from HMRC. This also means that you no longer need to complete the IHT421.
The new process has been introduced without any prior notice, and therefore, there are likely to be some applications which were submitted around the time of the new rules.
In those cases, HMCTS may ask the personal representatives if HMRC has provided a code before they progress the application, which may cause some short-term delays.
The main intention behind the changes appears to be to try to prevent premature grant applications to the probate registry in the future and to reduce overall delays for grants being issued.