When a loved one, family or friend passes away, this is always a difficult time for any individual and the last thing that many people will think about is tax. Unfortunately, as Mark Twain put it, there are two certainties in life: death and taxes.
How does Probate work?
Depending on the amount that the deceased owns at the time of their death (as well as what is written into a Will), a process called Probate may well need to be followed.
Although this is possible to complete yourself, given the complex nature of the Probate and tax rules and forms, it is often advisable to seek professional help as this will not only ensure that this is completed correctly, but also takes away a large amount of hassle at a time where you may be grieving.
One part of the probate process is ‘Obtaining a grant of probate’ which is effectively where you apply to HMRC for permission to distribute the assets held within the estate as per the wishes and Will of the deceased.
This stage happens after you have managed to collect all the assets within the estate, value all of these assets and prepare all of the required forms (Form PA1 for probate and also the relevant Inheritance Tax Forms, IHT 205 or IHT 400).
Once the forms have been completed, you will need to go to submit these forms, along with the original will and the death certificate to the Probate Registry.
You will also need to swear an executor’s oath in order to swear that you have provided the correct information.
What are the fees involved in the Probate process?
This is in addition to a small fee that you will need to pay to the Probate Registry for a Grant of Probate. This fee currently stands at £155 if you have used a solicitor, but stands at £215 if you are applying personally.
This fee however is set to change as HMRC will introduce a new tiered system of charges from 1 May 2017. These charges will be as follows:
Estate Size | Fee |
<£50,000 | NIL |
£50,001 - £300,000 | £300 |
£300,001 - £500,000 | £1,000 |
£500,001 - £1,000,000 | £4,000 |
£1,000,001 - £1,600,000 | £8,000 |
£1,600,001 - £2,000,000 | £12,000 |
£2,000,000 + | £20,000 |
As you can see, for someone who has an estate worth over £2m, the difference in cost between obtaining the Grant of Probate from 30 April 2017 and 1 May 2017 is a whopping £19,785!
Although there is no way of accelerating the tasks prior to obtaining the Grant of Probate, it is worth bearing in mind that there is this additional charge that will need to be paid by the estate.
If you want to find out more about Probate and how Wisteria can assist with the preparation and submission of the Probate and tax forms, please contact us on 020 8429 9245 or [email protected].