New anti-money laundering requirements affecting trusts and estate administration

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HMRC has launched its “trusts register” for trustees and personal representatives of complex probate matters.

Trustees and personal representatives now have a single point of online access to comply with their new registration and reporting obligations.  All trusts and estates with a tax liability must be registered and provide information about the trust assets and the identities of settlors, other trustees, beneficiaries, those with effective control over the trust and anyone identified in a document or instrument relating to the trust.

On an annual basis, the trustees will now have to ensure and confirm that the trust register is accurate and up to date, even where trusts were registered under the old system (Forms 41G).  The registration deadline for new trusts has been extended to December 2017 and the registration deadline for existing trusts falls early in 2018.

This provision may affect you if you are involved with sorting out someone’s affairs after they have died, or if you are a trustee of a trust of any kind.

Update on probate court fees and changes to inheritance tax

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Increase in court fees for grants of probate

You may be aware that due to the government calling a snap election, the proposed increases have been put on hold for the time being.

Record Inheritance Tax bills and how the new rules may affect you 

The tax year 2015/16 saw a huge increase in the revenue generated by inheritance tax for the Treasury. The total amount raised was £4.7 billion, an increase of 22% over the previous year.  House price rises, especially in London and the South East, have been the main reason for the increase as well as increases in the value of other assets eg shares.

In addition, the level of the nil rate band (the threshold over which inheritance tax is payable ) has been the same for the last 8 years, currently £325,000.

In April this year, new tax rules came into effect that will reduce some of the inheritance tax payable and we have reported on this previously: the residential nil rate band.  However, the full amount of this allowance does not kick in until 2021 and certain conditions must be met to qualify for it.

Careful estate planning to minimise the tax payable on death is therefore advisable. At Catchpole Law we specialise in giving advice of this nature. There are steps that can be taken quite legitimately to minimise the amount of tax payable ensuring that as much as possible can be passed on to the family instead of the Treasury.

Increase in court fees for grants of probate

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You may be aware that, despite widespread opposition, the government proposes to increase the fees for the application of a grant of probate from May this year.

What is this fee?

When someone dies, the value of their estate is calculated and where appropriate inheritance tax (IHT) is payable. Once IHT has been paid, the executors of the estate apply for the grant of probate.  The grant is the executor’s authority to deal with the deceased’s estate and is needed to dispose of investments and property etc.

The fee to apply for the grant is currently £155 when applying through a solicitor and £215 for a personal application. These fees are the same and regardless of the value of the deceased’s estate.

The proposed new fees will be based on the gross value of the deceased’s estate as follows:

Value of estate Proposed fee
£50,000 to £300,000 £300
£300,000 to £500,000 £1,000
£500,000 to £1 million £4,000
£1 million to £1.6 million £8,000
£1.6 million to £2 million £12,000
More than £2 million £20,000

These increases, which are subject to parliamentary approval, are obviously huge. Many estates may struggle to find the cash to pay them.  If you are dealing with the administration of an estate, you should try to apply for the grant as soon as possible to avoid the increases.

If we can be of assistance, please contact us.