Changes to Probate
Following the recent Autumn Budget (Click here for more) the government is investing £1 billion in order to upgrade and modernise the current archaic courts system so that it functions better for all parties involved whether it be someone from the legal or indeed accountancy profession or litigants. The aim is to offer a more sensitive approach to those who are recently bereaved who would otherwise find going through probate an extremely difficult time. The investment includes modernising the way probate can be achieved online as opposed to the usual way of penning a letter and waiting months for a response. As with MTD the intention is that this should reduce the time spent on the application process so that probate may be granted sooner.
The government are intending to publish a guidance document for people deciding not to use accountants or solicitors for the probate process, it will be entitled ‘Guidance on Ways to Pay for Probate Fees’. However using a professional is usually the best way forward as often the costs are covered by savings in time and correct treatment and processes. Whilst accountants are relatively new to the legally reserved areas of probate, all chartered accountants are required to take a law exam during their initial exams and following that they must then study in the area of probate and proceed to take an exam in it. Bolton & Co are one of 300 ICAEW accounting firms at the time of writing that do offer this probate service as many accounting firms may find the jump to legal work challenging, particularly complex cases such as probate can often put firms off. The banded approach may be bad news for wealthier estates as they will end up paying more than the previous rules required.
A major step comes with the announcement of the new probate fees. Originally the threshold began at £5,000 however now there is a banded approach beginning at £50,000 coming into effect in April 2019 in order to reflect tax fairly depending on the wealth of the estate. The aim is that the estate should never have to pay more than 0.5% of its worth in tax, under these new rules around 80% of estates will pay a probate fee of £750 or possibly less and that tax will go to running and improving the courts and tribunal service. With the new system in place the larger estates will be paying the higher fees as the banded approach takes into consideration the value of the estate before charging. An interesting development is that the Chancellor will retain a power to remit a fee should he consider there to be exceptional circumstances.
There is little that can be done specifically to minimise these charges on an estate. However they are of course only charged on an estates value at the time of death so can be avoided or reduced by Inheritance Tax planning. If we can be of any assistance in this area please do not hesitate to contact us.