The government is proposing a new tiered system of probate fees in England and Wales, based on the value of the deceased’s estate, rather than the current flat fee of £215.
Presently an application fee of £215 is made payable to HM Courts and Tribunals Service on all estates over £5,000.
With all the news surrounding Brexit you may have not read that under new rules proposed by the government, the system of probate fees would change, to one based on the value of the deceased’s estate. In Scotland, the equivalent Confirmation process continues with a flat rate fee for eligible estates (currently £225). Estates worth more than £50,000 will face probate fees which rise as the value of the estate increases.
I/We believe this is an unfair form of tax for ordinary families. With the increase in house prices many estates will now be subject to the proposed increase in fees. The death of a loved one can be an expensive process as it is, with funeral costs to pay upfront prior to the estate being distributed. For families to have to pay this additional fee adds to their burden, both emotionally and financially. I/we would call for the Government to rethink these proposed probate fee increases.
To find out more about the increase in probate fees, and what inheritance tax your beneficiaries may be liable for contact us today by telephone or email and we will be happy to give you some initial, without obligation advice.
A regular question seems to revolve around whether property should be bought in an individual or a company’s name. There is no simple answer to this, and a number of factors come into play.
Factors such as; how long the properties will be owned for, when to extract the cash, how much income the investor wants to extract and other income sources are all considerations that must be taken into account. The vast majority will look to buy property in their personal names because there is less bureaucracy. Buy to let lenders generally only lend to those purchasing properties in their own name, in many cases this will be a determining factor.
Buying through a ltd company provides a separate legal status to buying individually. This will also ensure that the company’s name will appear on Land Registry as the owner as opposed to the individuals. This ensures your details are kept private, protecting your personal credit status. However, you have to publish publically available financial accounts. Although these are not detailed when small, the requirements increase alongside the size of your company.
Benefiting from corporate structure
When holding a property investment through your company, corporation tax which is likely to be around 20% (17% from 2020) of the profit generated, but not drawn out, of the business. Some individuals will pay as high as 40% rates of tax on their rental income profits you could potentially generate a yearly tax saving of 20% which could increase tenfold if consistently reinvested over the years. Personally owned property means that any income is taxed in its entirety every tax year tax year giving no ability to defer.
Disposing the Asset…
Selling a property personally would normally mean 18% (Basic rate) or 28% (Higher tax rate) capital gains tax. Whereas those selling through a ltd company would pay 20% corporation tax as well as being subject to the same tax on dividends outlined above for higher rate tax payers. For those looking to sell a property every few years you are better to own it personally as this will ultimately reduce the capital gains tax bill. Too frequent (more than 1 a year) may invite HMRC to claim you are property trading and charge you income tax anyway.