Three taxes, three different answers
The word "deductible" is doing three jobs here, and the answer flips depending on which tax you mean. Against inheritance tax, the £526 probate application fee is not deductible. Against income tax on income the estate earns during administration, it is not deductible either, and HMRC says so by name. Against capital gains tax on a sale by the executors, the cost of getting the grant is effectively recognised, through a published scale most consumer guides never mention. That third answer is where the money is. What follows is general information rather than legal or tax advice, and covers England and Wales unless stated otherwise.
Inheritance tax: no, and the reason matters
Inheritance tax is charged on the value of the estate immediately before death, and that timing is the whole answer. A deduction has to be something the deceased already owed at that moment. HMRC's Inheritance Tax Manual at IHTM10361 puts it plainly: a deduction is allowed for debts the deceased actually owed at the date of death, and a debt has to be legally enforceable to count. The probate fee is incurred later, by the executors, so it never enters the calculation.
Two things do come off, and it is worth being clear which:
- Reasonable funeral expenses, specifically allowed by section 172 of the Inheritance Tax Act 1984 and covered at IHTM10371. These go in box 81 of the IHT400 with an itemised breakdown.
- Debts of the deceased: the mortgage, credit cards, outstanding bills, anything legally owed at the date of death.
Two things do not, however much they feel like costs of the estate: professional fees for administering it, and the costs of selling assets that were unsold at the date of death. HMRC values property at the open market price a buyer would pay, before agents' commission or selling expenses come out (IHTM28081).
One narrow exception catches estates with property abroad. Under section 173 of the same Act, the additional expense of administering or realising foreign property is allowed, capped at the lower of the extra cost incurred and 5% of that property's value (IHTM27050). Obtaining a foreign grant is the classic example.
Income tax on estate income: no, and HMRC names it
If the estate earns income while it is being administered (rent, bank interest, dividends), the personal representatives pay income tax on it, and some expenses can be set against that income. The probate fee is not one of them. HMRC's list of expenses that are not allowable, at TSEM7914, includes "probate/confirmation fees" in terms, along with funeral expenses, the costs of collecting and preserving the deceased's assets, the taxes themselves, and professional fees for preparing inheritance tax accounts.
What is allowable, per TSEM7912, is narrower than people expect: professional fees for the estate's income tax returns, the income-related share of preparing estate accounts, and administration expenses genuinely concerned with generating income. Ordinary letting costs work as normal. The grant of probate does not generate income, so it fails the test.
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Capital gains tax: yes, through a scale most people miss
If the executors sell an estate asset for more than its date-of-death value, the estate has a capital gain. Personal representatives pay CGT at 24% on all assets for disposals from 30 October 2024, and get the full annual exempt amount of £3,000 for the tax year of death and the two tax years after it, then nothing (CG30600, GOV.UK rates and allowances).
Against that gain, executors deduct the usual incidental costs of disposal under section 38 of the Taxation of Chargeable Gains Act 1992: agent's commission, conveyancing, advertising and valuation costs (CG15250). They can also deduct the cost of establishing title, which is the probate and administration cost wearing a different hat. Rather than making executors itemise it, HMRC publishes a scale in Statement of Practice SP2/04, confirmed in helpsheet HS282 (2026) and set out at CG30570:
| Gross value of the estate | Allowable cost of establishing title |
|---|---|
| Up to £50,000 | 1.8% of the probate value of the assets sold |
| £50,001 to £90,000 | Fixed £900, split across the estate's assets |
| £90,001 to £400,000 | 1% of the probate value of the assets sold |
| £400,001 to £500,000 | Fixed £4,000, split across the estate's assets |
| £500,001 to £1,000,000 | 0.8% of the probate value of the assets sold |
| £1,000,001 to £5,000,000 | Fixed £8,000, split across the estate's assets |
| Over £5,000,000 | 0.16% of the probate value of the assets sold, capped at £10,000 |
The scale applies to deaths after 5 April 2004, and it is an alternative to claiming the actual expenditure rather than an addition to it. Executors who use the scale cannot then add the £526 court fee, the solicitor's administration bill and the cost of the grant copies on top. Pick the higher of the two routes and evidence it. HMRC's guidance at CG30580 confirms the same scale may be applied in Scottish cases, where the equivalent grant is confirmation.
What that is worth in practice
Dermot and Aoife Lynch are joint executors of their father's estate, gross value £380,000. His flat was valued at £310,000 for probate and sold nine months later for £338,000, with £5,400 of agent and conveyancing fees.
- Gross gain: £338,000 minus £310,000 = £28,000
- Less selling costs under section 38: £5,400
- Less cost of establishing title (1% of £310,000, the £90,001 to £400,000 band): £3,100
- Chargeable gain: £19,500, less the £3,000 annual exempt amount = £16,500
- CGT at 24%: £3,960
Without SP2/04 the taxable gain would have been £19,600 and the bill £4,704, so the scale saved them £744, roughly one and a half times the probate fee itself. Because the flat is UK residential property, they also had to report and pay within 60 days of completion.
Keeping the three straight
Inheritance tax looks backwards to the moment of death, so post-death costs are invisible to it. Income tax asks whether a cost helped produce income, and a grant does not. Capital gains tax asks what it cost to acquire, establish title to and dispose of the asset, which is the only one of the three questions probate actually answers. In all three the fee is paid by the estate, not personally by the executor.
Our guide to what probate costs in total sets out every line of the bill, the full court fee schedule covers the £526 and the £2 sealed copies, and estate accounts for executors shows how to record costs so the capital and income sides stay separable. The probate cost calculator totals your own estate in a couple of minutes, our probate pillar guide covers the process end to end, and capital gains tax on inherited property is the next read if a sale is in prospect.
Choosing between the SP2/04 scale and actual expenditure is worth settling before the returns are filed rather than after. If the estate you are administering will sell a property or carry rental income, we can put you in touch with a probate specialist who can price both routes. Our hub for executors collects the rest of the reading.