Grieving Families Could Face New death tax of £20,000
£20,000 Death Tax
This new administration fee, which some are calling a back door death tax could see some bereaved families filling the government coffers with £20,000
According to ministers the new scheme would be better for poorer families whose estate was worth £50,000 or less as they would no longer have to pay the existing fee, which currently stands at £155 (up from £45 in 2014)
This will sound good to some, however as this new tax is designed to raise £250 million pounds, there will be many families who see a massive increase compared to what they pay now.
At the moment if you were to inherit a modest family home worth £290,000 the current charge would be £155 under new these new measure you would see that bill rise six fold to £1,000.
It doesn’t stop there as the fee rises sharply depending on the value of the estate. For example lets say you were inheriting an average London home with a value of just over 5000,000 your new bill will be £4,000 which quickly rises to £8,000 for estates worth 1,000,000. The cap of £20,000 would be payable for all estates valued at £2,000,000 or more.
This will be hard to swallow for many when you consider as we mentioned earlier that the existing fee is just £155 if acting through a solicitor.
It is expected these new fees will be unpopular however, Shailesh Vara, the justice Minister said, “this new fee would be a critical contribution to cutting the deficit as well as paying for an overhaul of the burdened courts system.
The consultation was cleverly launched while people’s attention was focussed on the negotiations in Brussels over Britain’s membership of the European Union.
In a letter to Bob Neil, chairman of the justice and select committee, Mr Vara, wrote, ”Court fees are never popular but they are necessary if we are as a nation, to live within our means”
“These proposals are progressive and will raise an additional £250 million pounds a year which is a major part of cutting the deficit and reducing the burden on the tax payer of running the courts and tribunals.”
In summing up, The ministry of Justice reiterated that only one per cent of estates would be liable for the top fee of £20,000 and nearly 60% of estates would pay no fee for probate at all.
The amount of families who will have to pay the top fee of 20,000 is expected to be around 2,700.
At the moment only estates valued up to £5,000 are exempt from the existing fee. That threshold will rise to 50,000 under the new proposals. The consultation process runs until April.
If you would like more information about inheritance tax or probate please contact us at Hoskin financial planning