Huge increase in probate fees

scotsbob

Last Friday, while the media was awash with by election stories, the government hiked up the Probate fees. Check the government site to see how much the increases will be.




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Keep_pedalling

Its only huge of you have an estate over £300,000 which is apparently only 16% of estates the other 84% will pay either £300 (a small increase) or nothing (a decrease)

This also coincides with the introduction of the residential nil rate band coming in so over all most (but not all) larger estates will be better off overall.

scotsbob

Keep_pedalling wrote: »

Its only huge of you have an estate over £300,000 which is apparently only 16% of estates the other 84% will pay either £300 (a small increase) or nothing (a decrease)

Any estate over £50,000 faces a rise from £215 to £300 that's an increase of 40%. I don't consider 40% to be a small increase.


Once you tip over £300,000 you face a 365% increase, that's £1,000.


I am also surprised by your statistic that only 16% of estates are over £300,000. Bearing in mind that the average house value alone is £217,000 (and rising) It won't take much with inflation and savings to reach £300,000.


https://www.gov.uk/government/news/uk-house-price-index-hpi-for-july-2016


You say larger estates will be better off. How can they be when the rates for larger estates see the fees escalate from the present £215 to a scale ranging from £4,000 to £20,000?

getmore4less

scotsbob wrote: »

I am also surprised by your statistic that only 16% of estates are over £300,000.

2014 data(rough as the sources use mixed data)

564,000 deaths
248,272 grants(went to probate/letters of administration)
65,347 over £300k
19,277 taxed.

Around 11.6% over £300k
Around 3.4% pay tax.

Keep_pedalling

scotsbob wrote: »

Any estate over £50,000 faces a rise from £215 to £300 that's an increase of 40%. I don't consider 40% to be a small increase.


Once you tip over £300,000 you face a 365% increase, that's £1,000.


I am also surprised by your statistic that only 16% of estates are over £300,000. Bearing in mind that the average house value alone is £217,000 (and rising) It won't take much with inflation and savings to reach £300,000.


https://www.gov.uk/government/news/uk-house-price-index-hpi-for-july-2016


You say larger estates will be better off. How can they be when the rates for larger estates see the fees escalate from the present £215 to a scale ranging from £4,000 to £20,000?

I got the figures from the very documents you suggested we look up in your opening post. Since the consultation document was issued that has been revised to 18% in the response to the consultation document.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/594451/probate-consultation-response.pdf

As for larger estates being better off, consider a house owning couple with a combined net worth of £1.2M split 50/50 who plan to leave everything to their spouse and then to their children when the second one dies.

On the first death it is true that probate fee will jump to £4000 and on the second that will double to £8000. But at the same time that higher probate fees come in so does the nil rate allowance for the family home which will reduce IHT on the combined estate by £120,000

Of cause this only works if you have direct descendants to leave your estates to, but if you lack those, then it hardly matters as you can't take it with you.

getmore4less

Keep_pedalling wrote: »

I got the figures from the very documents you suggested we look up in your opening post. Since the consultation document was issued that has been revised to 18% in the response to the consultation document.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/594451/probate-consultation-response.pdf

As for larger estates being better off, consider a house owning couple with a combined net worth of £1.2M split 50/50 who plan to leave everything to their spouse and then to their children when the second one dies.

On the first death it is true that probate fee will jump to £4000 and on the second that will double to £8000. But at the same time that higher probate fees come in so does the nil rate allowance for the family home which will reduce IHT on the combined estate by £120,000

Of cause this only works if you have direct descendants to leave your estates to, but if you lack those, then it hardly matters as you can't take it with you.

That first fee can be avoided with joint assets.
Take the net below £300k save £3k

sebastianj

getmore4less, and how do you get the net below 300k for first death, by altering the proportion of the asset?

seb

missile

sebastianj wrote: »

getmore4less, and how do you get the net below 300k for first death, by altering the proportion of the asset?

seb

Good trick, but only if you have a crystal ball to predict which partner will die first.

Keep_pedalling

If the house was owned as joint tenants and all other assets owned jointly, then you could avoid probate fees entirely on the first death.

That would mean you would have to avoid things like ISAs which can't be held jointly, but that would be rather silly. Next month we will transfer the full ISA allowance to our S&Ss ISAs and at £20k a year it should take no more than 5 years for our ISAs alone to push our solely owned assets over the £300k band, and there are many people who already have ISAs above that level.