Last week’s budget received mainly positive responses from the general public and the media, but one subsequent item which the Treasury was clearly trying to keep under the radar is the proposed massive hike on probate costs, causing uproar all round.
Currently the cost of probate is £215 (£155 through a solicitor), with the IHT threshold (Inheritance Tax) having been frozen at £325,000 for the past decade. In 2017/18 the taxman took a record breaking £5.2bn in IHT and this year the amount is expected to be at least £5.5bn, with anticipated continuing increases of 3.5%-6% over the next five years.
From the increase of probate costs alone, the taxman will receive an extra £185million a year in charges from 2022-23.
Geoff Newman, Development Director of leading Hertfordshire financial planning and financial services company Lyndhurst Financial Management says
“The Government has decided to link the probate charge to the size of the deceased’s estate and the levy ranges from £250 for estates valued between £50,001- £300,000 to £6,000 above £2million.
Probate fees were meant to cover the cost of a simple service, now they are another way for the government to bring in more death duties. Although the Justice Minister said fees will never be more than 0.5% of an estate’s value, there are concerns that this is just the start of more taxation on assets that people have acquired throughout their lifetimes and justifiably want to leave to their families when they die.
There are complications as the probate fee needs to be paid upfront and there may be questions on how the money will be recovered from the estate as assets are frozen until the executors receive grant of probate.
As always, we advise people to get professional advice on all aspects of inheritance tax and how best to protect their assets for themselves and their families.”