Probate loans and inheritance advances, explained

A probate loan (also called an executor's loan or estate loan) is short-term, secured borrowing that gets cash to an estate before probate is granted and its own accounts are unlocked. It's usually taken out to cover a cost that can't wait — most commonly the non-instalment part of Inheritance Tax, which HMRC usually expects to be paid before it will support a grant, or funeral costs.

It's repaid in full once the estate is realised, from the proceeds. It's a genuinely different product from an inheritance advance, which is bought against one named beneficiary's expected share rather than lent to the estate as a whole.

No, though the two are often marketed together and even confused by providers themselves.

A probate loan is made to the executor or personal representative, to cover a cost the estate itself faces before it can be accessed. An inheritance advance is structured differently: a provider buys, or is assigned, a named beneficiary's expected share of the estate, and pays that beneficiary now rather than lending money to be repaid later.

Whether a facility is written as a loan or as a purchase of a beneficiary's interest can affect whether it sits inside or outside consumer credit rules — which is exactly why the structure of any specific agreement matters more than what it's called in a brochure.

It genuinely depends on the specific product, and the honest answer is that this isn't settled by a single rule. Whether a probate loan or inheritance advance falls under FCA consumer credit regulation turns on things like whether it's secured against residential property, whether it's written as a regulated credit agreement to an individual borrower, or whether it's structured as an assignment of a beneficiary's interest that a provider argues sits outside the regulated perimeter.

A natural person doesn't automatically stop being an “individual” under the relevant rules simply by acting as an executor, but this is a technical point without a single settled answer in the sources checked for this page.

Before signing anything, check both the firm and the exact product on the FCA Register, not just that the company is authorised for something in general.

Usually, yes — and it's worth ruling out before any commercial loan. HMRC's Direct Payment Scheme (form IHT423) lets an executor instruct a participating bank, building society, NS&I provider or investment account holder to pay some or all of the Inheritance Tax bill straight to HMRC from the deceased's own sole-name accounts, before probate is granted — HMRC charges nothing for the scheme itself, though participating institutions may have their own processes and timelines.

It only works for accounts held in the deceased's sole name — joint accounts aren't eligible through this specific route, though they often pass by survivorship and can typically be accessed a different way.

Separately, tax attributable to qualifying land, a business or certain shareholdings can be paid in ten equal annual instalments under s.227 IHTA 1984 rather than as a lump sum, which removes part of the cash-flow problem for many estates outright.

Where an estate genuinely has no funds it can reach at all, HMRC's “grant on credit” route can let a grant be issued before all the tax is paid, provided the executor pays what they can, shows they've considered all reasonable funding options (a commercial loan hasn't been required for this since 1 April 2024), and signs a binding undertaking to pay the rest by a fixed date — HMRC's standard late-payment interest still runs on the deferred amount. Interest on the separate ten-year instalment option is more nuanced: it runs on instalments of tax on land or property, but instalments on a business interest, a controlling shareholding, or qualifying shares carry interest relief, and are interest-free for deaths on or after 6 April 2026 where the asset qualifies for Agricultural Relief or Business Relief, provided each instalment is paid on time.

HMRC's combined late-payment interest rate — which applies to Inheritance Tax among most other taxes it administers — is 7.75% (the Bank of England base rate plus 4 percentage points), effective from 9 January 2026. HMRC's repayment interest rate, paid on tax overpaid, is 2.75% (base rate minus 1 point, with a floor of 0.5%).

Both rates move automatically whenever the Bank of England changes base rate, so check GOV.UK for the current figure before relying on it — by the time you read this, it may already have moved.

Sometimes, but it isn't standard. Some banks offer an in-house executor loan or probate-bridging facility. The only reliable answer comes from asking the deceased's own bank directly — don't assume either way.