National Savings and Investments are sending letters to bereaved families that could flag payouts of £367million. The total sum has been confirmed by NS&I, with the savings bank company failing to find every account when asked to search after customers had died.

Up to 34,000 estates will have around £367 million of overlooked NS&I money returned with interest, the bank has confirmed. The money will either include the interest built up since the error occurred or interest paid at the Bank of England base rate plus 1%. Both income tax and inheritance tax on the payouts will be waived due to the delays.

Despite the tax write-off and update to NS&I’s account search, delays are expected to continue into the autumn, Headline Money reported.

Sarah Coles, head of personal finance at AJ Bell, said: “NS&I is hoping to bring down the curtain on its now notorious bereavement drama by reuniting the estates of deceased customers with the money it failed to track down – with interest added on top. The government has also agreed to waive any inheritance tax that would have been due on the money, or any income tax on the interest.

“Unfortunately, for anyone trying to process the estate of a loved one who had NS&I holdings, the administrative burden continues. Instead of taking its standard two weeks to respond, NS&I is currently taking eight, with the service not expected to go back to normal until the autumn.”

Coles went on to denounce the changes as a further headache for the bereaved, who would now need to foot the bill for the longer wait.

Coles added: “Anyone who has had to deal with an estate is no stranger to delays. Executors have to stick to strict deadlines, and for estates where inheritance tax is due, money has to be handed over within six months of the end of the month in which the person died.

“It means any delays in the process can be expensive as well as frustrating. The extra six weeks’ wait from NS&I will come as yet another headache for anyone slogging through the process.”