Controversial probate fee hike dubbed a ‘stealth tax’ on grieving families scrapped

Controversial probate fee hike dubbed a ‘stealth tax’ on grieving families scrapped

The extra death duty – which was set to come into force next year – could have cost the largest estates £6,000

Stephen Little
Mon, 10/14/2019 – 11:01

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The government has decided to scrap the controversial probate fee hike introduced by Theresa May.

Probate fees were set to go up next year, potentially hitting 300,000 bereaved families a year.

Under the new system the charge would have gone up according to the value of the estate.

The changes would have seen the flat fee of £215 a year go up to £6,000 for the largest estates – raising around £155 million a year for the government.

The government will now review probate fees as part of the annual assessment of the fees charged for proceedings in the civil and family courts.

A Ministry of Justice spokesperson says: “Fees are necessary to properly fund our world-leading courts system, but we have listened carefully to concerns around changes to those charged for probate and will look at them again as part of a wider review to make sure all fees are fair and proportionate.”

Jon Greer, head of retirement policy at Quilter, says: “A hike in probate fees has been on the cards for numerous months now, but just this weekend the justice secretary scrapped the controversial plan.

“The dispute was primarily because the tiered charge structure resembled a tax, rather than a fee. 

“Even the Office for National Statistics said that it expected to treat the charges as a tax in its evaluation of the UK’s finances. Scrapping the hike in favour of a review was an easy win that was hard to miss.”

Probate fees give legal control to the family over the estate of someone when they pass away.

Currently a flat fee of £215 applies in England and Wales – or £155 if you use a solicitor – on estates above £5,000.

Critics argued that the hike was a backdoor stealth tax that would hurt grieving families.

Under the original plan, the threshold for paying fees was set to be lifted to £50,000, exempting 25,000 estates annually from fees.

Estates valued between £50,000 to £300,000 would be charged £250, going up to a maximum £6,000 for estates more than £2 million.

Kay Ingram, director of public policy at LEBC, says: “I am delighted as we campaigned against this increase which looked more like a tax than a fee.

“We understand the courts have to be paid for but lumping that cost on bereaved families was an unfair burden and we are pleased that the government have listened.”

How long do I need to wait to sell my buy-to-let if I add my wife on the deeds?

How long do I need to wait to sell my buy-to-let if I add my wife on the deeds?

I own a rental property in my name. I would like to put my wife on to the deeds before I sell it, so we can split the tax liability. We are both basic-rate taxpayers.

Francis Klonowski
Fri, 10/11/2019 – 00:26

From
ML/Wokingham

I have never come across this three-month rule, although that doesn’t mean it doesn’t exist. I would be very interested to know where, and from whom, you came across it. I wonder if it something to do with the rule about a property once having been a ‘principal private residence’, where there may be capital gains reductions if you lived in it as main residence for a period of time. Your wife would not qualify for this exemption, and I understand it would also invalidate your own exemption if you transferred the property to joint names.

There is no capital gains tax when you transfer a part-share of the property to your wife. The purchase cost will be the one that you paid when you originally acquired it but now divided between you according to the percentage you now own. So, assuming you split the ownership 50/50, then your purchase cost is divided 50/50.

To implement the transfer of ownership, a solicitor can prepare a Deed of Trust, which specifies how you want ownership to be reallocated. A declaration of trust will be cheaper than registering a legal transfer at the Land Registry.

For income tax purposes, any future rental income will be taxable on a 50/50 basis. If you want a different split, you will need to complete a Form 17 and send it to HMRC with a copy of the Deed of Trust: this form is a declaration of income to ensure that property income can be reallocated between you in the right percentages. Without this, HMRC does not accept the Deed of Trust as valid for splitting income tax.

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MPs call for restoration of free TV licences for the over-75s

MPs call for restoration of free TV licences for the over-75s

The House of Commons media select committee criticised the BBC for ‘poor management, leadership and governance’

Stephen Little
Fri, 10/11/2019 – 11:11

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MPs are urging the government and the BBC to work together to restore TV licences to the over-75s.

The House of Commons media select committee is calling on TV bosses and the government to agree a deal so that free TV licences can continue after 2020.

In its report, the committee says the BBC should have acted earlier to communicate the likelihood that it would not be able to fund a full licence fee concession for people over 75 from 2020.

It slammed the government for seeking to ‘bounce’ the BBC into accepting a deal that would make the BBC responsible for funding TV licences.

The BBC Director-General Tony Hall was also criticised for his handling of negotiations, particularly in failing to seek the formal agreement of the executive board before recommending to the BBC Trust the deal struck with the government.

In 2015, the government announced it would no longer subsidise the cost of the licence fee and the BBC would have to find the funding itself.

At the moment everyone aged over the age of 75 gets it free but as of next June they will have to pay the £154.50 a year themselves.

The BBC has said that from next year anyone over 75 and claiming pension credits will get a free TV licence.

However, the committee claims that the BBC has put itself in the “absurd situation” of being the administrator of welfare benefits that should only ever be implemented by the government.

Conservative MP Damian Collins, chair of the committee, says: “This is an invidious position for the BBC to put itself in.

“It agreed to fund a pensioner benefit that it couldn’t afford and as a result, false reassurances were given to the over 75s that their free licence fees would be maintained.

“The BBC and the government much reach an agreement to allow the funding of free licence fees for the over 75s to continue after 2020.”

The committee concludes that the government and the BBC should agree a funding formula for free licences for the over-75s when negotiations next take place in 2021.

Fury at axing

After the government shifted the cost of the licence fee for over-75s to the BBC the corporation was left to choose between scrapping the concession for the elderly or cutting broadcasting services.

The cost of funding the TV licence for people aged over 75 is £745 million a year.

The BBC says that to renew the scheme would cost around a fifth of its budget – the equivalent to what it spends on BBC Two, BBC Three, BBC Four, the BBC News Channel, CBBC and CBeebies.

The scrapping of the licence means up to 3.7 million pensioners will have to start paying from June 2020.

The decision to remove free licences for the over-75s has drawn widespread criticism and could even force the elderly into poverty.

Caroline Abrahams, charity director at Age UK, says: “Over the last few months it has become clear that the BBC’s plan to means-test these licences for over-75s from June 2020 will result in significant numbers being forced to choose between buying a licence, cutting back on essentials like heating and eating, or continuing watching the TV without a licence, thereby breaking the law.

“In addition, requiring the millions of people in this age group to buy a licence or prove their eligibility for a free one, in many cases for the first time in donkey’s years, is a recipe for chaos and for a lot of accidental non-compliance.”

Sir David Clementi, chairman of the BBC, says: “The committee say that the government’s process in 2015 was flawed and we agree with this. It was never a process the BBC would have chosen.

“That’s why there must be a different way of doing things in the future. In terms of the agreement itself, we are satisfied that it was properly discussed within the BBC and properly authorised.”

“We will continue to implement the decision we have taken – after extensive consultation – on over 75s licence fees with great care and responsibility.”

Bank of England unveils new £20 note featuring the artist JMW Turner

Bank of England unveils new £20 note featuring the artist JMW Turner

The Bank of England says the polymer note is the most secure it has designed

Stephen Little
Thu, 10/10/2019 – 12:00

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The Bank of England governor Mark Carney has unveiled the design of the new £20 note featuring the artist JMW Turner.

The new note was launched at the Turner Contemporary gallery in Margate, named after the famous landscape painter. Turner went to school in Margate and the town inspired many of his paintings.

The polymer £20 note comes after the launch of the Churchill £5 in 2016 and the Austen £10 in 2017.

The note, which the banks says is it most secure yet, will enter circulation on 20 February 2020.

The Bank has moved away from traditional paper notes because polymer is more durable, cleaner, and more difficult to forge.

The public can continue to spend paper £20 notes as usual and notice will be given six months ahead of them being withdrawn.

Mr Carney says: “Our banknotes celebrate the UK’s heritage, salute its culture, and testify to the achievements of its most notable individuals. Turner’s contribution to art extends well beyond his favourite stretch of shoreline. 

“Turner’s painting was transformative, his influence spanned lifetimes, and his legacy endures today. The new £20 note celebrates Turner, his art and his legacy in all their radiant, colourful, evocative glory.”

The polymer £20 note contains sophisticated security that makes it difficult to counterfeit, including two see-through windows and a metallic hologram.

Polymer notes last longer than paper notes and they stay in better condition during day-to-day use.

Just like the polymer £10, the note will contain a tactile feature to help vision impaired people identify the denomination.

The note features one of Turner’s most eminent paintings, The Fighting Temeraire – a tribute to the ship HMS Temeraire which involved in Nelson’s victory at the Battle of Trafalgar in 1805.

The painting is currently on display in the National Gallery and was voted the nation’s favourite painting in a 2005 poll run by BBC Radio 4.

The new £20 note will be the first to feature the signature of Sarah John, the Bank’s chief cashier.

She says: “The new £20 is an important part of our commitment to providing banknotes that people can use with confidence. 

“Our polymer notes are much harder to counterfeit and, with the £20 being our most common note, this marks a big step forward in our fight against counterfeiting. I hope the public will look forward to spending their new Turner £20s from February next year.”