Probate Interest Calculator
Work out exactly how much interest will accrue on estate funds or late Inheritance Tax (IHT) payments based on the principal amount, interest rate, and time period.
Calculate Accrued Interest
Enter the principal amount, annual interest rate, and duration. The calculator instantly works out the total interest accrued, whether for estate savings or late HMRC payments.
Probate Interest Estimator
Get an instant breakdown of interest on estates or late taxes.
Understanding Probate Interest
Key concepts for executors and beneficiaries
Late IHT Interest
HMRC charges simple interest on unpaid Inheritance Tax from the original due date (usually 6 months after the end of the month of death) until the date of full payment.
Estate Account Interest
Funds held in an executor bank account during probate can earn compound interest. This interest belongs to the estate and must be declared to HMRC for Income Tax purposes.
Beneficiary Legacies
Specific monetary legacies may accrue interest if the executor unreasonably delays payment beyond the ‘executor’s year’ (12 months from the date of death), depending on the will’s terms.
HMRC Rate Changes
HMRC reviews its interest rates quarterly. Late payment interest is typically set at the Bank of England base rate plus 2.5%, while repayment interest is base rate minus 1%.
Common Probate Interest Scenarios
Typical interest rate contexts encountered during estate administration and Inheritance Tax settlements.
| Scenario | Interest Type | Typical Rate Context | Tax Implications |
|---|---|---|---|
| Late IHT Payment | Simple Interest | HMRC Base Rate + 2.5% (e.g., ~7.75%) | Not tax-deductible for the estate |
| HMRC IHT Overpayment | Simple Interest | HMRC Base Rate – 1% (e.g., ~3.25%) | Generally tax-free repayment interest |
| Executor Bank Account | Compound Interest | Commercial bank rates (e.g., 3.00% – 5.00%) | Taxable as estate income (Form R185) |
| Delayed Beneficiary Legacy | Simple Interest | As specified in the Will or court-determined | Treated as income for the beneficiary |
Probate Interest FAQ
Answers to the most frequently asked questions about interest during estate administration.
HMRC charges simple interest on late Inheritance Tax (IHT) payments from the original due date (usually 6 months after the end of the month of death) until the date the tax is fully paid. The interest rate is set by HMRC and changes periodically.
Yes, if estate funds are held in an interest-bearing executor bank account. The interest earned belongs to the estate and is subject to Income Tax, which the executor must report to HMRC using form R185.
If an executor unreasonably delays the distribution of an estate without valid cause (beyond the ‘executor’s year’), a beneficiary may be entitled to claim interest on their legacy. Reasonable delays for settling debts or taxes do not typically incur executor liability.
Yes. Interest earned on estate funds during the administration period is considered income of the estate. The executor is responsible for declaring this to HMRC and paying any applicable Income Tax before distributing the remaining funds to beneficiaries.
You can pay IHT on certain assets (like land, buildings, or unquoted shares) in 10 yearly instalments. However, interest will still accrue on each unpaid instalment from the original due date until that specific instalment is paid.