UTB provides £240,000 bridge to help cover inheritance tax

The facility – which was at 48% LTV for nine months – was needed to pay a substantial amount of inheritance tax (IHT) after the client became the sole beneficiary of their mother’s estate.

Despite the estate including some cash, there wasn’t enough to meet the inheritance tax liability, which meant a bridging loan was required.

The estate included an unencumbered, freehold property comprising three retail units with flats above.

The retail units and flats were fully let and – once probate had been granted – the client intended to sell the semi-commercial units to repay the loan in full.

However, the property could not be taken as security as a charge could not be made on a property until probate had been granted, creating a catch-22 situation.

As the property contained in the estate was ruled out as security, UTB was offered a charge on the client’s family home instead.

The home was not subject to any mortgage and UTB was able to write the loan on the basis that if for any reason probate was not granted or if another creditor or beneficiary of the estate was identified before the property was sold, an alternative exit by way of a residential mortgage on the family home would be a viable option.

“We frequently receive enquiries where a bridging loan is required either to assist with probate or to help distribute a deceased’s estate among beneficiaries,” said Rob Love, head of broker development for bridging at UTB (pictured above).
 
“This is a good example of where a loan could be structured to help pay IHT even though a charge was not available on the originally proposed security.

“At UTB, we always try to think creatively to find a quick and straightforward solution.”