Bridging finance for inheritance tax

Why executors turn to short-term funding now

Probate once took days. Today, many families in England and Wales wait more than 30 weeks for a grant, while HMRC still expects inheritance tax within six months of the month of death. That mismatch creates a cashflow gap, especially when most of the estate value sits in property that cannot be sold or refinanced until probate is granted.

Bridging finance fills that gap. A short-term secured loan is advanced rapidly, typically for 6 to 12 months, with interest rolled up so there are no monthly repayments. The loan is repaid when the estate is liquidated or when beneficiaries receive their inheritance. It is a practical tool that helps executors meet HMRC deadlines, avoid compounding interest, and protect the value of the estate during a slow probate cycle.

With the nil-rate band held at £325,000 for the 2025-26 tax year, and 40% charged above that, many estates face substantial liabilities. Couples can combine allowances, potentially reaching £1 million tax-free including the residence nil-rate band, yet average bills are still significant. The typical inheritance tax liability was around £214,000 in 2021 and is projected to near £239,000 in 2025 as property values rise. Few executors have that kind of cash available at short notice.

You cannot borrow against the inherited property before probate, so lenders usually secure a first or second charge against the executor’s existing home or other assets. The exit strategy is central to approval, often the sale of the estate’s property or the applicant’s share of the inheritance. In a market where many banks no longer offer traditional probate loans, specialist bridging has become the keystone solution.

Understanding APR is not just about percentages. It is about how much you will pay in real terms and how that compares with HMRC interest if you delay.

Take timely advice, compare lenders, and map the loan term to realistic probate timings to avoid stress later.

Who benefits from this approach

This route suits UK executors and personal representatives who need to pay inheritance tax but cannot access estate funds due to probate delays. It also helps beneficiaries who want to prevent a forced sale, for example where a family home needs time to achieve a fair market price. Farming and business families affected by tighter reliefs may need short-term liquidity to settle higher tax exposures without disrupting operations. If your estate position is property-heavy, your timelines uncertain, and you want to avoid HMRC interest charges, bridging can provide orderly breathing space.

Ways to handle the IHT bill

1. Use personal savings and investments to pay HMRC, reclaim from the estate later.

2. Arrange a bridging loan secured on your existing property or assets.

3. Negotiate instalments for qualifying assets where HMRC allows, typically on certain property or business interests.

4. Sell estate assets quickly to raise cash, accepting potential price reductions.

What it costs and the real-world effects

Who is eligible and what lenders expect

Before probate, the inherited property cannot be used as security, so the loan is generally secured against the applicant’s existing UK property as a first or second charge, or occasionally other acceptable assets. Lenders want a clear, credible exit strategy, typically the sale of the estate property or the applicant’s inheritance receipt. They will assess title, any existing mortgages, affordability in case timelines slip, and the strength of the overall estate position. Many specialist lenders prefer applicants who have been UK residents for at least two years and who are executors or beneficiaries with documented entitlement.

Kandoo, as a UK-based retail finance broker, can introduce you to a panel of specialist lenders that understand probate timelines, HMRC rules, and the realities of property-heavy estates. Expect standard conveyancing checks, property valuations, and legal undertakings that ensure funds are used for the tax liability and that sale proceeds are earmarked to repay the facility once probate completes.

From enquiry to repayment in clear steps

1. Confirm IHT estimate and payment deadline with your solicitor.

2. Identify security property and check any existing charges.

3. Define exit strategy from estate sale or inheritance receipt.

4. Apply via broker with documents and timeline evidence.

5. Valuation, legals, and conditional approval issued.

6. Draw down funds and pay HMRC before deadline.

7. Obtain probate, complete sale or distribution.

8. Repay loan and interest from agreed proceeds.

Upsides and trade-offs at a glance

What to check before you proceed

Timing is critical. Map the six-month HMRC deadline against current probate processing times, which now often exceed 30 weeks. Build contingency into the loan term and costings in case a sale takes longer than planned. Compare the all-in cost of bridging with the HMRC interest you would otherwise pay, including the possibility of instalment options on qualifying assets. Ensure the security property has enough equity for a first or second charge and consider the implications if market conditions change. Read the loan documents carefully, including default clauses, valuation assumptions, and any guarantees or undertakings should the estate realise less than expected.

Sensible alternatives if bridging is not right

1. Pay from personal cash or investments, then reclaim from the estate.

2. Use HMRC instalment facilities where available on qualifying assets.

3. Arrange a short-term family loan documented by a solicitor.

Common questions, straight answers

Q: Why not wait and pay HMRC when probate arrives? A: After six months, HMRC charges interest. Bridging lets you pay on time, avoiding extra costs that can erode beneficiary shares.

Q: Can I secure the loan on the inherited property before probate? A: No. Security is usually taken over your existing UK property or other assets until probate is granted.

Q: How long do I need the loan for? A: Many take 6 to 12 months, but with probate often exceeding 30 weeks, some choose up to 24 months to provide headroom.

Q: Will I make monthly repayments? A: Typically no. Interest is rolled up and repaid with the capital at the end of the term from sale proceeds or your inheritance.

Q: What if the estate sells for less than expected? A: Lenders assess this risk upfront. Some structures include additional undertakings, but you remain responsible for any shortfall unless otherwise agreed.

Q: How much can I borrow? A: It depends on your available security, loan-to-value, and the strength of your exit. Higher equity and a clear sale plan usually increase capacity.

How Kandoo helps you act with confidence

Kandoo is a UK-based retail finance broker. We connect executors and beneficiaries with specialist bridging lenders who understand inheritance tax timelines. We compare options, outline total costs in plain English, and coordinate application, valuation, and legals for a swift drawdown. Speak with us early to align the loan term with your probate and sale plans so you can pay HMRC on time and protect the estate’s value.

Next step: Gather your estimated IHT calculation, probate status, and property details, then request personalised rates through Kandoo.

Important information

This content is for general information only and is not tax, legal, or financial advice. Eligibility and rates depend on circumstances, security, and lender criteria. Always seek advice from a solicitor and a qualified tax professional before proceeding.