Inheritance Tax Bridging Loan Rates September 2026 — Bridge Cost vs HMRC Instalment Plan
- HMRC deadline for IHT payment from date of death
- 6 monthsHMRC deadline for IHT payment from date of death
- IHT bridging loan rate/month (same as standard residential bridge, Sept 2026)
- 0.65%–0.85%IHT bridging loan rate/month (same as standard residential bridge, Sept 2026)
- HMRC interest rate on unpaid IHT — the alternative cost (current rate)
- 7.75%HMRC interest rate on unpaid IHT — the alternative cost (current rate)
- DC pension pots now included in IHT estate — increasing bridge demand
- April 2026DC pension pots now included in IHT estate — increasing bridge demand
Inheritance tax bridging loan rates in September 2026 are the same as standard residential or commercial bridging rates — typically 0.65%–0.85%/month depending on LTV and the quality of the estate property security. The case for bridging is the timing problem: HMRC requires IHT to be paid within 6 months of death, but the grant of probate — which authorises the sale of estate assets — often takes 9–18 months. A bridge secured against estate property pays HMRC within the 6-month deadline, avoiding the 7.75% p.a. HMRC interest that accrues on unpaid IHT.
IHT Bridge vs HMRC Options — Cost Comparison September 2026
Swipe the table sideways to see every column.
| Option | Interest rate | Fees | 12-month cost (£200,000 IHT) | HMRC encumbrance | Best for |
|---|---|---|---|---|---|
| IHT bridging loan (secured on estate property) | 0.75%/month (~9% p.a.) | 1.5%–2% + legal ~£2,500 | ~£21,500 all in | None — HMRC paid in full | Estates where probate is delayed 9+ months |
| HMRC instalment plan (qualifying assets) | 7.75% p.a. (current HMRC rate) | None | ~£15,500 interest only | 10-year HMRC charge on estate | Qualifying assets only. Lower cost but 10yr encumbrance. |
| HMRC Late payment (no arrangement) | Late payment interest: 7.75% p.a. + penalties | Potential enforcement action | Rising — penalty compounds | HMRC enforcement risk | NEVER — do not miss the 6-month deadline |
| Grant on credit (probate application) | HMRC charges interest on IHT from 6 months | — | Same as unpaid IHT | HMRC charge remains until paid | Limited use — only buys time for probate, not IHT reduction |
What determines your rate
The April 2026 pension change — why more estates now need bridging
From April 2026, defined contribution pension pots are included in the IHT estate for most individuals. Before this change, DC pensions passed outside the estate. A married couple with a DC pension of £400,000 between them now have £400,000 more in their taxable estate. At 40% IHT, this is £160,000 additional tax — payable within 6 months of death. For many families, this means the IHT bill now exceeds the available liquid assets of the estate, making an IHT bridge the only way to pay on time. DBF has seen IHT bridging enquiries increase significantly since April 2026.
When is the HMRC instalment plan better?
HMRC's instalment plan allows IHT on qualifying assets (land and buildings, business assets, unquoted shares, certain agricultural property) to be paid over 10 years. The HMRC interest rate (7.75% p.a. as of September 2026) is lower than the annualised bridging cost (~9% p.a.). On a £200,000 IHT liability, the HMRC instalment plan over 10 years costs ~£15,500 in interest. The IHT bridge over 12 months costs ~£21,500 all in. However: the HMRC instalment plan leaves a 10-year HMRC charge on the estate property, preventing sale without IHT settlement. If the estate intends to sell the property, the bridge is often the better choice.
What executor authority is needed for an IHT bridge
Executors have legal authority to borrow against estate assets to meet the estate's obligations — including paying IHT. The estate's solicitor confirms executor authority. Most IHT bridge lenders proceed without the grant of probate being in place — they rely on the executor's confirmed authority and the estate solicitor's professional undertaking. DBF works alongside the estate solicitor on every IHT bridging case.
LTV on estate property for IHT bridges
The IHT bridge is secured against the estate property. Most lenders cap at 70%–75% LTV on residential estate property and 60%–65% on commercial. At low LTV (30%–50% of estate property value — common where the estate has a modest IHT liability relative to a valuable property), rates are at the lower end (0.65%–0.72%/month). DBF calculates the LTV position before approaching lenders.
Worked cost example
- Total cost
- £38,129
Estate: residential property £620,000 (no mortgage) + DC pension pot £350,000 (now in estate from April 2026).
NRB and RNRB applied. IHT liability: £318,000. Due: 6 months from date of death.
Probate expected: 14 months from death (complex estate with multiple assets).
IHT bridge: £318,000 secured on estate property (51.3% LTV — very conservative).
Rate: 0.68%/month (low LTV). 14-month term (until probate obtained and property sold).
Interest: £30,259. Arrangement fee (1.5%): £4,770. Legal: £2,500. Valuation: £600.
Alternative — HMRC instalment plan (qualifying — residential property is a qualifying asset)
10-year plan. IHT paid in 10 annual instalments of £31,800 + 7.75% p.a. interest.
Year 1 interest: £24,645. Total interest over 10 years: ~£134,025 (estimated).
But: property cannot be sold without full IHT settlement — 10-year encumbrance.
If estate intends to sell property at probate: bridge at £38,129 total is far cheaper.
If estate intends to retain property: HMRC instalment plan may be more cost-effective (lower rate, no bridge fees), despite the 10-year encumbrance.
Rate context and outlook
The Bank of England held its base rate at 3.75% on 30 July 2026 in a divided 6-3 vote. Three MPC members voted to raise to 4.0%. Next decision: 17 September 2026. DBF has multiple IHT bridging case studies including executor loans, second charge bridging for IHT liability, and estate expense finance. The April 2026 pension inclusion in IHT estates has materially increased demand for IHT bridging — many families are discovering that their DC pension pushes the estate above IHT thresholds for the first time. DBF manages all IHT bridging cases with appropriate sensitivity and discretion.
Frequently asked questions
What rate does an IHT bridging loan cost?
IHT bridging loan rates are the same as standard residential bridging — 0.65%–0.85%/month depending on LTV and security quality. Estate properties at low LTV (30%–50% of property value) access the lowest rates. Arrangement fees: 1.5%–2%. DBF calculates the total cost including all fees before approaching lenders.
Is an IHT bridge cheaper than the HMRC instalment plan?
The HMRC instalment plan at 7.75% p.a. has a lower annual rate than bridging (~9% p.a. annualised). However, the instalment plan runs for 10 years and leaves a HMRC charge on the estate property — preventing sale without full IHT settlement. If the estate intends to sell the property, the bridge (paid off at probate and property sale) is typically the better economic choice. DBF models both options for every IHT bridge enquiry.
Can an executor borrow against estate property before probate?
Yes — executors have legal authority to borrow against estate assets to meet the estate's obligations (including IHT). Most bridging lenders will lend to executors without the grant of probate being in place, relying on the estate solicitor's confirmation of executor authority. DBF manages this process alongside the estate solicitor.
How has the April 2026 pension change affected IHT bridging?
From April 2026, defined contribution pension pots are included in the IHT estate. This has significantly increased IHT liabilities for many families — particularly those where the deceased had a substantial DC pension. The pension funds are not immediately accessible (they remain invested), making it harder to pay IHT within the 6-month deadline without bridging finance. DBF has seen IHT bridging enquiries increase substantially since April 2026.
What happens if IHT is not paid within 6 months?
HMRC charges interest at 7.75% p.a. on unpaid IHT from the 6-month deadline. For larger liabilities, HMRC can also take enforcement action. DBF strongly advises against missing the 6-month deadline — the cost of bridging is almost always lower than the cost of HMRC interest, enforcement risk, and estate administration complexity.
Get a personalised rate comparison for your case
Independent whole-of-market advice · FCA No. 814533