Inheritance advance loans, also known as probate loans or inheritance advances, allow beneficiaries to access a portion of their expected inheritance before the probate process is completed.
Probate—the legal procedure of validating a will and distributing assets—can often take between nine to twelve months in the UK, delaying access to funds. These loans provide financial relief during this waiting period.
How Do Inheritance Advance Loans Work?
When you apply for an inheritance advance loan, the lender assesses the value of your anticipated inheritance. Based on this evaluation, they may offer an advance, typically up to 60% of your expected inheritance.
Unlike traditional loans, inheritance advances are secured against the inheritance itself, not personal assets, and usually do not require credit checks. Repayment is made directly from the estate once probate concludes, meaning there are no monthly payments or personal liability.
Example Scenario
Consider Sarah, who is set to inherit £100,000 from her late grandmother’s estate. Facing immediate financial needs, Sarah approaches a lender offering inheritance advance loans.
After evaluating the estate’s details, the lender agrees to advance her £50,000, which is 50% of her anticipated inheritance. Sarah receives these funds within a few days. Once probate is finalized, the estate disburses the inheritance, and the lender is repaid the £50,000 advance plus any accrued fees and interest directly from Sarah’s share.
What Are The Inheritance Tax Rates in the UK as of 2025
As of 2025, the standard Inheritance Tax (IHT) rate in the UK is 40%, applied to the portion of an estate exceeding the nil-rate band of £325,000.
Additionally, the residence nil-rate band provides an extra £175,000 allowance when passing on a primary residence to direct descendants, bringing the total potential tax-free allowance to £500,000 for individuals. For married couples or civil partners, any unused allowance can be transferred, allowing a combined tax-free threshold of up to £1 million.
Recent discussions have highlighted potential changes to IHT rules. For instance, from April 2027, inherited pension pots may be subjected to IHT, potentially leading to combined tax rates as high as 76% when accounting for both income tax and IHT. These developments underscore the importance of staying informed and seeking professional advice when planning for inheritance and tax liabilities.
What To Consider Before Applying For an Inheritance Advance
While inheritance advance loans offer quick access to funds, it’s essential to understand the associated costs. Lenders typically charge fees and interest, which are deducted from the final inheritance distribution. Beneficiaries should ensure that the estate’s value comfortably covers these deductions to avoid financial strain.
Additionally, since these loans are repaid from the estate, it’s crucial to maintain open communication with executors and other beneficiaries to ensure a smooth process.
In summary, inheritance advance loans can be a valuable tool for beneficiaries needing immediate funds during the probate process. However, it’s vital to carefully assess the terms and potential costs involved, considering the broader context of inheritance tax obligations and any forthcoming legislative changes.
