Whilst everyone has been distracted by Brexit, the government have been busy putting through a new, so-called, ‘Death Tax’. It could see families having to pay up to £6,000 after the passing of a family member.
Despite the name, the increased charge is technically a fee. By labelling it as a fee rather than a tax, Ministers have avoided the charge increases having to go through the usual parliamentary debate, causing a bit of a backlash.
The tax will apply on probate
When you die, your assets are frozen. Probate is the act of legally securing the estate of a relative who has passed away, allowing the assets to be accessed and distributed.
Currently a flat fee is charged at £215 for a grant of probate. Or £155 if the family uses a solicitor. This is set to change thanks to the new ‘Death Tax’.
How much can families expect to pay?
It has been suggested that around 280,000 families a year will face an increase to the probate charge, with approximately 56,000 having to pay between £2,500 and £6,000. Quite a jump from the £155 they may have paid before!
Estates worth less than £50,000 will be exempt from any fee. Previously estates of just £5,000 were exempt. That means there are more families who may end up not having to pay anything instead.
A breakdown of the proposed new charges
The new fee is going to increase in proportion to the value of the estate being secured. The more your estate is worth, the higher the new probate grant charge.
The breakdown would be as follows:
- Up to £50,000 – £0
- £50,000 – £300,000 – £250
- £300,000 – £500,000 – £750
- £500,000 – £1 Million – £2,500
- £1 million – £1.6 million – £4,000
- £1.6 million – £2 million – £5,000
- Above £2 million – £6,000
The increase comes into force from April. It is expected that an extra £185 million will be raised for the Ministry of Justice by 2022/23 thanks to the ‘death tax’.
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