The Re-introduction of the Death Tax!
Perhaps masked by the Brexit ‘excitement’, the recent announcement by the Government to re-introduce what has been previously dubbed a “death tax” appears to have gone largely unnoticed.
As previously reported last year’s attempted introduction of the new probate fees, payable when the application for a Grant is made, was cancelled following a public uproar.
The Government confirmed this month that from April 2019 the fees would be removed for estates under £50,000 but will be increased for estates over that threshold. Some estates will have to pay up to £6,000 whereas at the moment the fee is £155 for those using a solicitor or £215 if the personal representative is applying to the court for a Grant on their own. The proposed fees are listed below:
|Value of Estate (Before Inheritance Tax)||Proposed Fee|
|Up to £50,000 or exempt from requiring a grant of probate||£0|
|£50,000 – £300,000||£250|
|£300,000 – £500,000||£750|
|£500,000 – £1m||£2,500|
|£1m – £1.6m||£4,000|
|£1.6m – £2m||£5,000|
Source: Ministry of Justice
It remains uncertain how personal representatives will settle the new probate fee, especially if there are no liquid funds in the estate.
Both probate solicitors and accountants argue that the fee increase is practically a hidden and additional “death” tax. Many professionals are also concerned that the probate fees are being changed through what is called a ‘statutory instrument’ rather than by the Government’s Finance Bill. This means the changes will be brought in, in a way that lacks sufficient accountability and transparency. Some critics even claim that the Ministry of Justice seems to be abusing its constitutional powers.
It seems unlikely that the Government will back track again, but given the current political furore who knows what might happen come next April? The best advice at the moment must, however, be to seek professional tax planning advice as this may help you to mitigate the “death” tax.
We appreciate that the new probate fees may cause confusion and that not all estates are straightforward. Therefore, if you need more information on the “death” tax, with the administration of the estate of a loved one or for tax planning advice, feel free to contact Veronica Ivanova on 020 7288 4706 or firstname.lastname@example.org or Michael Culver our Chartered Tax Adviser.
Alternatively, anyone in our Wealth and Estate Planning teams will be able to help.