HM Insights

Will Scotland be affected by the new "Death Tax" south of the Border?

The Ministry of Justice has announced a new tiered structure of probate fees in England and Wales. A grant of Probate is the equivalent to a grant of Confirmation in Scotland and allows the Executor to access and distribute someone's estate when they die.

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The recent proposal has been introduced via statutory instrument and will therefore avoid parliamentary scrutiny. Whilst it has been described as an increase in fees, many are viewing it as an additional inheritance tax – labelling it 'stealth death tax'.

South of the Border they currently have a flat rate fee of £215 if probate is applied for by friends or family and £155 if a solicitor completes the process. The new charging structure, due to be introduced in April 2019, will see probate fees calculated using a sliding scale based on the value of an estate. Estates valued between £300,000 to £500,000 before inheritance tax will pay £750 and it is estimated that 80% of estates will pay this or less, however, estates above £2million will pay £6000.

The Government have noted that the dramatic rise is to assist with funding the courts and tribunal system and would help plug a shortfall in the £1.6 billion cost of the courts service. However, it is thought the change will provide an extra £185 million a year by 2022-23. Some believe that given the limited work required to issue grant of Probate it could lead to an escalation in disproportionate court fees in other areas.

Concerns have been raised as to how families will pay the upfront fee without the ability to recover money from the estate as accounts are frozen. It has been suggested that they may require a loan in order to gain access to the assets. Whilst banks may be willing to release funds in a similar way to funeral costs, this will not assist those estates which are land rich but cash poor.

What is the situation in Scotland?

The introduction of the "death tax" is only applicable to estates in England and Wales and there is no indication that similar fees are anticipated in Scotland. Whilst the Commissary fees in Scotland use a scale based on the value of the estate, the fees are modest in comparison to those proposed down south. The fees payable for grant of Confirmation from 25th April 2018 are:

  • Up to £50,000 – no fee
  • £50,000.01 to £250,000 - £256
  • Exceeding £250,000.01 - £512

Although Scotland's current fees exceed those in England and Wales, after the introduction of the Death Tax, estates in Scotland will be in a far preferable position.

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