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A change to inheritance tax that will save beneficiaries thousands of pounds could be offset by a proposed hike in probate court fees.
From 6 April 2017 the much heralded £1million inheritance tax (IHT) nil rate band comes into effect (well, nearly!). It will apply gradually over successive tax years resulting in the crowning £1million exemption for spouses’ estates by 2020. It will apply when your house is left to your children and would raise the threshold from the current £650,000 before IHT is charged at 40% on an estate.
But the potential IHT savings would be dampened if a proposal to dramatically raise the court fee for obtaining a Grant of Representation is made law. A Grant of Representation is required in many deceased estates especially where there is a property or stocks and shares. Currently the court fee for lawyer applications is a flat fee of £155 plus 50p for each copy required, for any estate worth £5,000 or more.
The Government’s proposal is to introduce a sliding scale of court fees based on the value of an estate. The good news is that any estate worth up to £50,000 would pay no fee at all. However, an estate worth between £300,000 and £500,000 would pay a £1,000 fee, an estate between £500,000 and £1 million would pay £4,000, between £1million and £1.6million would pay £8,000, while an estate worth £2million or greater would suffer a £20,000 fee. The cost would be deductible from the estate.
Further, the finer detail of the IHT £1 million allowance may leave some with high value estates not benefiting. For example, if your estate is worth over £2million then the additional allowance is tapered away such that if an estate is worth £2.35million or more, then the whole allowance is lost. Also, if your Will contains a trust for your children then you should get it reviewed because some trusts will prevent the top-up applying.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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