Probate fee changes

Probate fee changes: a new “death” tax?

In March 2017 we reported that the Government was proposing to raise probate fees significantly (see our article here https://www.doddaccountants.co.uk/news/taxing-times-march-2017/).  In fact, “significant” is too understated a word for it – the rise in fees will be a 3,770% increase for some estates!

A new probate fee structure that means estates worth £2m or more will pay £6,000 in probate fees, up from a set fee of £215 – £155 if a solicitor is employed – currently payable, has been labelled a “stealth death tax”. The increase is a reduction on the original plans, which would have seen a bill of £20,000 for the largest estates. Estates with a value of between £1m and £1.6m will have to pay £4,000.

The changes were brought in via a “negative statutory instrument” which enabled the Government to write the changes into law without debate.

The Government said the changes were necessary to fund the courts system and were a “fair and more progressive” way of paying. It estimated the move would raise £185m a year by 2022/23. Many, including the Law Society, have called this unfair and unjustified and it can be seen as a new tax on top of the existing Inheritance Tax.  The Law Society and others fear the changes could force families to use unregulated planning services for IHT in an effort to shield their assets from HMRC.

The fee may cause cash flow problems for some estates which are property rich but cash poor, and – as with stamp duty land tax – there is an inherent flaw in the system that the people who have to pay may not have benefited in cash terms from soaring property values.

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