Confirmation and Probate Charges – a tax on dying

April 2017 Update

Regarding the proposed Probate Fees increase in England.

Probate Fees increase stopped in tracks.

The Probate Fees increase due to be introduced in England & Wales from May 2017 have fallen victim to the snap election due to lack of Parliamentary Time.

Criticised as a stealth tax the swinging increase saw probate fees increasing from a few hundred pound pounds to up to £20,000. We will need to wait and see if the proposal resurfaces after the election or gets lost in the long grass. It might be a hot topic for canvassers on the doorsteps of those affected. Thanks due to the Sunday Times for shining a light on this little publicised proposal. Now with the election in June there is breathing space and time for a rethink – formerly known as a U turn!

Below we have left the original article as it highlights matters of domicile between England and Scotland that may be of interest to clients with cross border interests.

The Taxing Question of Death – the original article posted March 2017

Choose Scotland to make your will and save tax!

There is a well known saying that there are two certainties in life – death and taxes. For those with Estates over £300,000 however, there may be a choice that can save on the latter if you have a Scottish Will.

Based as we are in the Scottish Borders we often have clients who have interests on both the English and Scottish sides. The Scots and English legal systems are quite separate but, with effect from May 2017, there is a large disparity between the probate charges (the cost of registering a will to enable Executors to collect the Estate for distribution) of the two systems.

In a controversial and little publicised hike in England and Wales, probate charges  are set to increase from a few hundred pounds up to as much as £20,000! In Scotland there is a flat rate ceiling and the maximum charge is £500 for estates over £250,000. Compare that to the proposed new charges in England and Wales where estates from £300,001 to £500,000 will pay £1000; from £500,001 to £1m will pay £4,000 with further increases depending on the value of the estate with those from £1.6m to £2m paying £12,000 and over £2m an eye watering £20,000!

These increases do not apply in Scotland or Northern Ireland. When you consider the value of property, particularly estates with property in Southern England, this is a tax that is going to affect many and reduce the Estate passed to families and beneficiaries, including charities.

So what is the choice?

Not everyone can, but if you are able, why not consider having your estate administered in Scotland where the equivalent procedure (called Confirmation) is subject to a maximum registration charge of just £500. There is potential to make significant savings to pass on to your beneficiaries. However you will need to be able to establish a connection by way of residence or domicile in Scotland. One way of achieving this is to make your will with a Scottish Solicitor and include a declaration of domicile, known as ‘domicile of choice’. This is particularly helpful for those that have moved away and may die outside Scotland. Their estate may be wound up based on the law of the country they were living when they die. If that is in England or Wales and the estate is over £300,000 they would incur the higher probate charges.

If you have moved to Scotland to live and intend settling here it makes sense to consider making a Scottish Will. Even if you later consider moving back to England or Wales the residence and domicile criteria could be met.

For those Scottish by birth and Scots at heart but living outside Scotland it is also a tax saving option worth considering.

Registering a will to enable Executors to collect the Estate for distribution is known as ‘Probate’ in England and ‘Confirmation’ in ScotlandHastings Legal Lab

We have offices in Duns, Kelso and Selkirk but if you can’t come to us, don’t worry, one of our solicitors can visit you at home or hospital.