It’s Tuesday! Let’s talk Tax. Read this week’s short tax snippet for Doctors & Dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – take 5 minutes to have a read.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it.
The Financial Conduct Authority does not regulate tax advice.
Dramatic rise in probate fees
A “grant of probate” allows an executor to carry out administration tasks for a deceased person such as pay inheritance tax and settle other debts, according to the wishes laid out in the will.
At present, there is a flat fee structure:
- £215 if probate is applied for by family or friends
- £155 if probate is conducted by a solicitor
However, new proposals by the government that could come into force this month, indicate a drastic rise in probate fees, that are most likely to affect those people living in areas like London and South East, where property prices have escalated in recent years.
The Government have suggested the additional fees are needed to cover legal costs, although most taxpayers will see this as a sneaky “death tax”, as estimates show the Treasury will benefit £1.5 billion over 5 years.
How will probate fees be calculated?
Instead of a flat fee system, probate fees will soon be calculated on the value of your estate.
Also, unlike income tax, or the new Stamp Duty Land Tax, which operates in tiers, the probate fee structure will mean that being even £1 over a certain threshold could result in thousands of pounds in additional fees.
Inheritance tax planning will become more important than ever to understand in full, the value of your estate.
Estates valued up to £300,000 will pay a fee of just £300. A little more than the current fee but still affordable.
Estates valued over £2 million though could pay over £20,000 in probate fees under the new system. For estates valued at £1 million, the fee is £8,000.
The Government have said that only 2 percent of estates would pay between £8,000 and £20,000 in fees.
However, if you are a doctor or dentist with property and other wealth, you could find yourself amongst these fee brackets.
There are ways to reduce the value of your estate though. Speak to a financial adviser about your options.
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