A guide to pecuniary legacies and statutory interest
25 Nov 2024 |
1 minute read
When is interest payable on a legacy?
The personal representatives of an estate are given a year to administer the estate, known as 'The Executor's Year' (section 44, Administration of Estates Act 1925). If it has not been possible to pay pecuniary legacies before the end of the Executor's Year, statutory interest is payable for the period starting on the first anniversary of the death of the testator and ending on the date the pecuniary legacy is paid.
Where the deceased person left a Will, pecuniary legacies are the only form of legacy that attract statutory interest. The most common form of pecuniary legacy is a specified sum left to a named beneficiary, and payment must be made as soon as the personal representatives are in a position to do so. An example of a pecuniary legacy: "I give £10,000 to the Royal Society for the Prevention of Cruelty to Animals".
What rate of interest is due on a pecuniary legacy?
The rate of statutory interest for pecuniary legacies is set by the Court Funds Office. Whilst the rate does not mirror The Bank of England base rate, changes to the base rate are reflected in the statutory rate. The base rate has been increasing throughout 2022 in reaction to rising inflation. As a result, the statutory interest rates applicable to pecuniary legacies have increased several times. The rate changes are set out below.
| Time period | Interest rate |
| 1 June 2020 – 28 April 2022 | 0.05% |
| 29 April 2022 – 4 July 2022 | 0.323% |
| 5 July 2022 – 1 September 2022 | 0.94% |
| 2 September 2022 – 24 October 2022 | 1.313% |
| 25 October 2022 – 17 November 2022 | 1.688% |
| 18 November 2022 – 15 January 2023 | 2.25% |
| 16 January 2023 – 12 February 2023 | 2.625% |
| 13 February 2023 – 20 April 2023 | 3% |
| 21 April 2023 – 12 June 2023 | 3.188% |
| 13 June 2023 - 22 August 2023 | 3.375% |
| 23 August 2023 – 11 June 2024 | 5% |
| 12 June 2024 - 18 September 2024 | 3.94% |
| 19 September 2024 - present day | 3.75% |
What this means is that you may have a period where statutory interest is payable to a legatee that encompasses several different interest rates.
If you are ever making a distribution in relation to an estate, we recommend you check the position in relation to statutory interest by getting into contact with a member of our team.
Example
If we use the above example, the £10,000 legacy to the RSPCA was paid on 19 December 2022 but the first anniversary death arose on 10 March 2022, there would be statutory interest of £71.70 payable, which is broken down below:
| Time period | Applicable interest |
| 10 March 2022 – 28 April 2022 | At a rate of 0.05%, the applicable interest will be £0.68 |
| 29 April 2022 – 4 July 2022 | At a rate of 0.323%, the applicable interest will be £5.93 |
| 5 July 2022 – 1 September 2022 | At a rate of 0.94%, the applicable interest will be £15.19 |
| 2 September 2022 – 24 October 2022 | At a rate of 1.313%, the applicable interest will be £19.07 |
| 25 October 2022 – 17 November 2022 | At a rate of 1.688%, the applicable interest will be £11.10 |
| 18 November 2022 – 19 December 2022 | At a rate of 2.25%, the applicable interest will be £19.73 |
How we can help
If you would like further information on the interest due on pecuniary legacies, please contact a member of our Charity Probate team below.
Please note, the information in this article was last reviewed and updated on 25/11/2024.
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