Using a Bridging Loan to Pay Inheritance Tax
Losing a loved one is by far the biggest challenge anyone will experience during their lifetime; when faced with bereavement, the very last thing on your mind is satisfying the requirements of HMRC.
Providing the Great British public with minimal room for manoeuvre, HMRC grants six months to satisfy inheritance tax obligations following the death of a loved one.
Showing no mercy to those affected, HMRC will not hesitate to impose fines and penalties on those who do not fill the inheritance tax obligations on time. Precisely where a bridging loan can help, giving you one less thing to worry about while dealing with an already overwhelming experience.
Rapid Liquidation of Assets
Being allocated some or all of a deceased individual’s assets at the time of their death almost always results in an inevitable inheritance tax bill. The larger the deceased’s estate, the more you are expected to hand over to HMRC.
Unfortunately, six months is often far too short a period of time to liquidate enough of these assets to meet your inheritance tax obligations. This is why it is common for beneficiaries to rush the sale of properties and other inherited assets, often letting them go for far less than their true market value.
After selling off their inherited assets at a lower price and fulfilling HMRC’s requirements, they are left with far less than they were originally allocated.
In addition, there is always the risk of the sale of the assets falling through at any time. Should this happen, the individual(s) concerned may be unable to meet their inheritance tax obligations on time. After which, heavy fines and penalties are likely to be incurred.
Bridging Loans for Inheritance Tax Payments
An affordable bridging loan can provide welcome breathing room at one of the most difficult times in life. After inheriting assets from a deceased individual, a bridging loan can be taken out as a secured loan against one or more of the assets inherited.
With bridging finance, the funds can be accessed within a matter of days, after which repayment takes place six to 18 months later. This means that the funds can be used to cover the inheritance tax payment, while allowing plenty of time for the assets to be sold for their full market value.
HMRC gets its payment on time, and the beneficiary is not forced to settle for an uncompetitive price for their assets.
As the name suggests, bridging finance is designed to ‘bridge’ temporary gaps in an individual’s finances. Interest is charged on a monthly basis, typically around 0.5% or less per month. With prompt repayment, a bridging loan can be a uniquely affordable facility and is ideal for these kinds of applications.
For more information on the benefits of bridging loans or to discuss the use of bridging finance for inheritance tax payments in more detail, call anytime for an obligation-free consultation.