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Changes to Inheritance Tax and Probate fees

From 6th April 2017, changes are being made to Inheritance Tax which may benefit people who want to pass on their estate, including their home, directly to children or grandchildren.

 In addition to the existing tax-free threshold of £325,000 – also known as the Nil-Rate Band – the government is introducing a Residential Nil-Rate Band (RNBR) for estates worth up to £2 million. The RNBR will only apply when a home is being passed on to children or grandchildren and is being phased in yearly starting in the 2017/18 tax year. The additional allowances will be:

  • 2017-18:         £100,000
  • 2018-19:         £125,000
  • 2019-20:         £150,000
  • 2020-2021:     £175,000

Currently, married couples and civil partners can transfer their Nil-Rate Band to effectively double their tax-free allowance to £650,000 on the death of the first partner. The RNRB is also transferrable so it will effectively be worth up to £200,000 in 2017-18, up to £250,000 in 2018-19, up to £300,000 in 2019-2020 and finally up to £350,000 by April 2020. This means that couples may be able be able to pass on a total of up to £1 million in assets without any Inheritance Tax being chargeable by 2020.

Your Will, and possibly how your home is registered with the Land Registry, may need to be updated to make the most of this new tax-free allowance. The relief is not an automatic entitlement and does depend upon navigating some hurdles to ensure that the full relief from Inheritance Tax can be claimed.

 However, what they giveth in one hand they taketh with the other:

Changes to Probate Fees in England and Wales May 2017

Currently you will pay either £155 or £215 to obtain a Grant of Probate, which will give executors the right to distribute the proceeds of someone’s Will.

The Non-contentious Probate Fees Order 2017 is expected to come into force on 1 May 2017. From that date, the court fees for a probate application will change in accordance with a sliding scale set out below. Any application made on or after that date will be subject to the new fees.

Value of Estate Proposed Fee
Up to £50,000 £0
Between £50k – £300k £300
Between £300k – £500k £1,000
Between £500k – £1m £4,000
Between £1m – £1.6m £8,000
Between £1.6m – £2m £12,000
More than £2m £20,000