What do probate fees and Making Tax Digital have in common...?

5 May 2017 

The calling of an early general election for 8 June 2017 has had a knock on impact on a number of parliamentary procedures able to be completed.

Each process had to finish by the time parliament dissolved on 3 May, or delayed until after the election.

The reduced time to complete the Finance Bill process caused a delay to the implementation of legislation for Making Tax Digital (MTD). Another result of the ‘wash-up’, which sorts which processes get finished and which are chopped, was a welcome stalling of changes to probate fees. 

While not usually thought of as a tax issue, the increase in probate fees has been labelled ‘a tax on estates’ by the media. From May this year, estates worth over £2m were to have seen a £20,000 charge for probate costs, covering the paperwork for transferring control of assets, including property, money and possessions after death. The fee today is £155. This was to be a sliding scale with estates valued between £50,000 and £300,000 charged £300.

As at February 2017, the average value of a UK residential property was £217,000 most likely tipping many estates into the next band, attracting fees of £1,000.

However, given the impending election, the Ministry of Justice has announced that there is now insufficient time for the statutory instrument introducing the fees to be properly debated and go through Parliament. Any measures that have not become law by the time Parliament is dissolved are scrapped.

Therefore, although the Non-Contentious Probate Fees Order 2017 had been laid before Parliament, it will not become law before the election and there is no indication yet whether a new Government would reintroduce this scheme.

While the digitisation of the tax system is widely supported, a pause is very welcome as many professional bodies have highlighted gaps and the lack of detail in the proposed legislation.

Deferred to a later Finance Bill, MTD could be better thought out and implemented to the benefit of businesses and individuals, especially the self employed and landlords with turnover over the VAT threshold who were to implement MTD in April 2018.



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