New rules on probate fees will result in farmers and landowners incurring an eye-watering hike in the amount they pay to settle a loved-one’s will.
The new rules come into effect in May 2017 and will see some people’s bills rise by more than 9,000 per cent.
Currently the fee is fixed at £155 or £217 but the changes mean that anyone with an estate worth more than £50,000 will see that figure rise to £300 if it is valued below £300,000.
For those with estates worth between £500,000 and £1 million the probate fee will rise to £4,000 while those with estates valued between £1 million and £1.6 million will have to fork out £8,000.
A fee of £12,000 will be incurred for estates worth between £1.6 million and £2 million while those valued over £2 million will include a fee of £20,000.
'Caught out'
Matthew Peters from Bruton Knowles’ rural team is now advising that farmers and landowners, who have seen the value of their estate rise significantly in recent years, seek expert advice so that they put in place plans to help alleviate the hike in charges.
Mr Peters said: “In what was a largely underwhelming budget many people missed the later announcement on probate fees especially after all the fuss about self-employed NICS contributions.
“But now that the dust has settled, many people have now realised that they will be caught out by the new fee bands especially as they have benefited from rising property and land prices.
“The Government did undertake a consultation prior to the announcement but ploughed ahead with the changes despite dissent from the vast majority of those asked who believe the new rules are just a stealth or back door tax for larger estates.”
Asset rich, cash poor
Another consideration raised by Peters is that many people although asset rich, are cash poor so may find it difficult to pay if, as reported, the fee will need to be paid up front.
He added: “There may be ways to mitigate the hike in fees by giving away some assets now but our advice is to seek expert help so that it is done correctly to avoid complications later on.
“Another option could be to place a property into a trust. This would also help reduce the value of the estate for inheritance tax purposes.”
