The Sinister March of IHT and the Probate Fees Stealth Tax!

Inheritance Tax (IHT) is the most unjust of taxes because it applies to capital and income we have already paid tax on. The tax rules are changing, but all is not what it seems…..

The government quietly released figures with the Spring Budget on 8th March 2017 to show how much IHT revenue is collected by HM Treasury. For the year 2016/17, the total amount the government will receive in IHT is £4.7 billion. However, this figure is expected to rise to £6.2 billion by the year 2021/22.

It is also a tax that can easily creep up on us; with increasing asset values, especially in property, the individual threshold of £325,000 before a 40% inheritance tax is charged is easily reached. In fact, the Office for Budget Responsibility has forecast that 10% of deaths will be subject to IHT by 2018/19. It is for this reason that it is more important than ever to include inheritance tax planning as part of your general financial planning.

The complex Residence Nil Rate Band is a typical political fudge with the usual small print and loopholes, and the promise of the £1 million Nil Rate Band is not at all what is seems.

With equal stealth, the government is also planning significant increases to Probate fees. The current flat-rate charge of £155 for a solicitor-lodged application (£212 personal application) meets the cost to the state of rubber-stamping a Probate application and issuing a Grant of Probate. The amount of work is the same, regardless of the size of the estate. The fee must be paid before the Grant is issued, and before the family are able access funds.

From May HMG proposes to increase the charge, effectively to cross-subsidise the whole courts system. It is a tax in all but name. The new charges are to be:

• £300 for estates worth more than £50,000 and up to £300,000
• £1,000 for estates worth more than £300,000 and up to £500,000
• £4,000 for estates worth more than £500,000 and up to £1m
• £8,000 for estates worth more than £1m and up to £1.6m
• £12,000 for estates worth more than £1.6m and up to £2m
• £20,000 for estates worth more than £2m

If you find this objectionable, please sign the petition at this address:

https://petition.parliament.uk/petitions/188175

There are many planning opportunities to ensure IHT can still be ‘a voluntary tax’ but specialist advice is essential. To discuss your IHT planning contact the experts at Innes Reid on 01244 347583 or by email to info@innesreid.co.uk

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