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The Probate Tax is back

Practical Issues
JohnB
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The Probate Tax is back

#178370

Postby JohnB » November 6th, 2018, 6:43 am

The Ministry of Justice are reintroducing their proposals for a Probate Tax. Its clearly not a fee for work done, but a tax, a cynical attempt at wealth redistribution to cross-subsidise the whole court system. They should restrict their fee structure to reflect the work done on any case, and not become a taxation raising body. Why was this tax not included in the Budget, with its full media coverage and Finance Bill scrutiny?

https://www.gov.uk/government/speeches/ ... obate-fees

Bouleversee
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Re: The Probate Tax is back

#178381

Postby Bouleversee » November 6th, 2018, 7:30 am

I totally agree. How many times do they want to tax the same money. I had just received an email from my daughter with the following link and might as well post it anyway. https://www.thisismoney.co.uk/money/art ... ilies.html.
I do despise this sneaky behaviour.

We got it stopped last time and I, for one, will be kicking up a stink again. It will come back to bite them in the backside anyway as it will discourage people from accumulating savings for old age care and more will become dependent on the state.

DrBunsenHoneydew
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Re: The Probate Tax is back

#178425

Postby DrBunsenHoneydew » November 6th, 2018, 9:49 am

Here are the new fees:

Value of estate (before inheritance tax) and Proposed Fee from April 2019
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
Above £2m - £6,000
Source: MoJ

tjh290633
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Re: The Probate Tax is back

#178430

Postby tjh290633 » November 6th, 2018, 9:55 am

DrBunsenHoneydew wrote:Here are the new fees:

Value of estate (before inheritance tax) and Proposed Fee from April 2019
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
Above £2m - £6,000
Source: MoJ

Are those bands or payable on the total estate? If the latter, that is an horrific step change at £500k.

Answered my question by the link in the OP. It is banded. But is it a percentage or a fixed sum?

TJH

DrBunsenHoneydew
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Re: The Probate Tax is back

#178433

Postby DrBunsenHoneydew » November 6th, 2018, 9:59 am

tjh290633 wrote:Are those bands or payable on the total estate? If the latter, that is an horrific step change at £500k.

TJH

It's a threshold "slab" system with fixed fees in each band.

Some people might be having a very lavish funeral for the costs deduction!

PinkDalek
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Re: The Probate Tax is back

#178434

Postby PinkDalek » November 6th, 2018, 10:02 am

Top whack was to be £20,000, now £6,000.

tjh290633
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Re: The Probate Tax is back

#178438

Postby tjh290633 » November 6th, 2018, 10:10 am

DrBunsenHoneydew wrote:
tjh290633 wrote:Are those bands or payable on the total estate? If the latter, that is an horrific step change at £500k.

TJH

It's a threshold "slab" system with fixed fees in each band.

Some people might be having a very lavish funeral for the costs deduction!

Or a few charities will get very generous donations.

TJH

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Re: The Probate Tax is back

#178439

Postby PinkDalek » November 6th, 2018, 10:17 am

tjh290633 wrote:Or a few charities will get very generous donations.

TJH


Pre decease?

Bouleversee
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Re: The Probate Tax is back

#178440

Postby Bouleversee » November 6th, 2018, 10:18 am

As it is assessed before IHT is deducted, you are effectively being taxed twice on the same money, albeit at different rates.

DrBunsenHoneydew
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Re: The Probate Tax is back

#178489

Postby DrBunsenHoneydew » November 6th, 2018, 12:08 pm

Quite so.

Remember this fee is determined by the date of the application for probate, not the date of death. So if you are currently administering an estate, try to expedite!

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Re: The Probate Tax is back

#178567

Postby Lootman » November 6th, 2018, 4:04 pm

tjh290633 wrote:
DrBunsenHoneydew wrote:Some people might be having a very lavish funeral for the costs deduction!

Or a few charities will get very generous donations.

Or people will find more creative methods of avoiding probate altogether, which may result in a loss of IHT revenue as well, meaning that this new probate tax will be self-defeating.

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Re: The Probate Tax is back

#178573

Postby scrumpyjack » November 6th, 2018, 4:35 pm

Well the first step for any married couple is to ensure the family home and as many other assets are possible are held as joint tenants so they pass to the other half without being included in the probate figure on the first death.

Would be fun if someone with deep pockets was prepared to sue HMRC on the basis that this is a tax not a fee, as it bears no relationship with the work done, and any tax has to be authorised by Parliament. That was the reason they had to withdraw last time as I recall as good old Rees Mogg challenged it on that basis!

Increasingly the government's attitude is that all money and assets belong to them and anything they let you keep is a generous act of kindness or a 'concession; by them. Horrific!

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Re: The Probate Tax is back

#178624

Postby Lootman » November 6th, 2018, 8:12 pm

scrumpyjack wrote:Well the first step for any married couple is to ensure the family home and as many other assets are possible are held as joint tenants so they pass to the other half without being included in the probate figure on the first death.

Note that that little trick is not restricted to married couples. You can hold an asset as joint tenants with anyone. So a single person or surviving spouse could create joint tenancies for property and bank accounts, with his/her beneficiary named as the other tenant. It would not necessarily change the IHT exposure, but it would avoid all the hassles of probate, and of course this pesky new tax.

If legal you can also marry your beneficiary, which would make IHT go away as well.

Expect more of this type of thing if this tax becomes reality. People hate probate enough as it is, without paying for something that only benefits people outside the family.

Clitheroekid
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Re: The Probate Tax is back

#178630

Postby Clitheroekid » November 6th, 2018, 8:57 pm

Lootman wrote:If legal you can also marry your beneficiary, which would make IHT go away as well.

I've often thought there's a market for introducing single young people to aged and dying ones solely with a view to them getting hitched and thereby avoiding IHT altogether.

The idea came to me when an 83 year old client worth several mill decided to get married just for that reason. He married a former secretary who was, I think, in her early fifties.

It was quite funny, as we'd discussed it in a meeting, and he rang me just a couple of days later to tell me he was engaged. He asked me where was the quickest place to wed, as he didn't want to wait the statutory several week period that applies here. My first instinct was Nevada, but he didn't want to travel that far, so I did some research and came up with either Denmark or GIbraltar, in both of which countries you can marry the same day you arrive.

He liked the sound of Gib, so the next task he gave me was to try and organise it for him, as his computer skills were limited - a novel job, but as he was happy to pay for my time I agreed.

Fortunately, I discovered that you can buy a package deal wedding for a few thousand quid. He coughed up and the job was done!

This was about two years ago, and he's still going strong, so maybe a late marriage is beneficial to one's health.

Of course there is, on the face of it, a high risk that when he drops off his perch wifey will re-marry and/or that the wealth will pass out of his family. I'd therefore suggested various ways of avoiding this, but it didn't bother him as he took the view that his kids were rich enough anyway.

I was a bit annoyed with myself afterwards though, as it occurred to me that I could have married him, and solved my pension worries at a stroke! :lol:

But going back to the original idea, it could be a very lucrative exercise for all concerned, bearing in mind the huge sums that could be saved. The `marriage fee' could be based on a percentage of the tax saved, but as the savings in even a fairly modest estate could be into 6 figures it would be quite possible for the young person to `earn' enough to pay off their student loan.

And I'm sure the transfer of assets could be adequately protected by trusts etc, the idea being that the young person would give the assets away to the people chosen by the deceased and then survive 7 years to eliminate the IHT.

Remember, you saw it here first!

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Re: The Probate Tax is back

#178633

Postby Bouleversee » November 6th, 2018, 9:31 pm

Time to look for a toy-boy, then. :lol:

Bouleversee
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Re: The Probate Tax is back

#178639

Postby Bouleversee » November 6th, 2018, 10:31 pm

If you were annoyed about this proposed extra tax, you are likely to be doubly so if you listen to tonight's File on 4 and find out what happens to your taxes.

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Re: The Probate Tax is back

#178640

Postby AJC5001 » November 6th, 2018, 10:31 pm

JohnB wrote:The Ministry of Justice are reintroducing their proposals for a Probate Tax. Its clearly not a fee for work done, but a tax, a cynical attempt at wealth redistribution to cross-subsidise the whole court system. They should restrict their fee structure to reflect the work done on any case, and not become a taxation raising body. Why was this tax not included in the Budget, with its full media coverage and Finance Bill scrutiny?

https://www.gov.uk/government/speeches/ ... obate-fees


Does any of this apply in Scotland? The Scottish equivalent of Probate is called Confirmation.https://www.scotcourts.gov.uk/taking-action/dealing-with-a-deceased%27s-estate-in-scotland

Adrian

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Re: The Probate Tax is back

#178647

Postby PinkDalek » November 6th, 2018, 10:54 pm

Bouleversee wrote:Time to look for a toy-boy, then. :lol:


You called?


Lootman wrote:... If legal you can also marry your beneficiary, which would make IHT go away as well. ...


Hopefully anyone taking that comment seriously will do their own research, especially where, for instance, already wealthy Thai Brides or Grooms or somewhere in between are involved (and the many other Fools whose spouses etc are not UK Domiciled).

More seriously, for more detail see this re non UK domiciled spouses and civil partners:

https://assets.publishing.service.gov.u ... uk.pdf.pdf

Where an individual chooses not to elect for UK domicile treatment their overseas assets would, as now, be exempt from IHT but any transfers from their spouse or civil partner would be subject to the increased cap. Individuals who choose to make an election would benefit from uncapped IHT-exempt transfers from their spouse or civil partner, but subsequent disposals by them would be liable to IHT (subject to their own nil-rate band), irrespective of the location of the assets.

I’ll let others say if this was enacted or not.

Lootman
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Re: The Probate Tax is back

#178654

Postby Lootman » November 7th, 2018, 1:32 am

PinkDalek wrote:
Lootman wrote:... If legal you can also marry your beneficiary, which would make IHT go away as well. ...

Hopefully anyone taking that comment seriously will do their own research, especially where, for instance, already wealthy Thai Brides or Grooms or somewhere in between are involved (and the many other Fools whose spouses etc are not UK Domiciled).

More seriously, for more detail see this re non UK domiciled spouses and civil partners:

https://assets.publishing.service.gov.u ... uk.pdf.pdf

Where an individual chooses not to elect for UK domicile treatment their overseas assets would, as now, be exempt from IHT but any transfers from their spouse or civil partner would be subject to the increased cap. Individuals who choose to make an election would benefit from uncapped IHT-exempt transfers from their spouse or civil partner, but subsequent disposals by them would be liable to IHT (subject to their own nil-rate band), irrespective of the location of the assets.

I’ll let others say if this was enacted or not.

I am not sure where you are going with that since I never mentioned anything about foreign spouses or domicile.

But what I would note is that once assets have left the UK then HMRC will have a devil of a job trying to tax them, regardless of whether their rules have been cunningly written in such a way as to claim that they are subject to UK tax or not.

So IF you marry a Thai bride AND put everything in joint names AND then you died AND then she withdrew the lot and took them back to her villa in Phuket, then I would not rate HMRC's chances of ever collecting on their claims. Not sure much would change if she were British but went to Thailand after your death either.

Sure, if it is a UK home they might have a shot. But probate is what traps assets so that taxman can claim his pound of flesh. Take that away and . . .

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Re: The Probate Tax is back

#178693

Postby DrBunsenHoneydew » November 7th, 2018, 8:36 am

AJC5001 wrote:
JohnB wrote:The Ministry of Justice are reintroducing their proposals for a Probate Tax. Its clearly not a fee for work done, but a tax, a cynical attempt at wealth redistribution to cross-subsidise the whole court system. They should restrict their fee structure to reflect the work done on any case, and not become a taxation raising body. Why was this tax not included in the Budget, with its full media coverage and Finance Bill scrutiny?

https://www.gov.uk/government/speeches/ ... obate-fees


Does any of this apply in Scotland? The Scottish equivalent of Probate is called Confirmation.https://www.scotcourts.gov.uk/taking-action/dealing-with-a-deceased%27s-estate-in-scotland

Adrian

As you say, no Probate, but Scotland has a separate fee schedule for Confirmation.
Value of estate not exceeding:
£50,000 - No fee
£50,000.01 to £250,000 - £256
Exceeding £250,000 - £512
Plus £8 for Certificate.


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