Before the personal representatives of someone who has died can collect in the money, pay any debts and distribute what is left to those who are entitled to it, they will generally have to apply for Probate and obtain a Grant of Representation. This gives them the authority to administer the deceased's estate.

To apply for Probate and obtain the Grant of Representation, the personal representatives must first pay any Inheritance Tax (IHT) for which they are liable on delivery of their account under s. 226(2) Inheritance Tax Act 1984. As they cannot access the assets comprised in the estate until they have received the Grant of Representation, they may need to borrow to pay the IHT. In that case, they may be able to claim relief for the interest paid on the loan to pay the IHT (including any interest payable on that tax) against any income tax liabilities of the estate.

The aim of the provisions is to provide tax relief for interest on a temporary loan so that the Grant of Representation can be obtained and the estate assets used to repay the loan. Relief is restricted, therefore, to twelve months' interest.