The prospect of new probate fees could trigger an influx of inheritance tax (IHT) receipts this year as executors rush to beat the regulatory deadline, NFU Mutual has stated.
The financial advice firm released its analysis of HM Revenue and Customs tax receipts today (January 23), suggesting IHT receipts had reached £5.2bn in the 2018 calendar year.
In HMRC's most recent tax statistics published yesterday, IHT receipts for April to December 2018 were found to be 0.4 per cent higher than in the same period last year.
Sean McCann, chartered financial planner at NFU Mutual, said the proposed changes to probate fees in April could see a "bumper end" to the tax year for the Treasury, as IHT receipts spike in anticipation of higher costs.
In November last year the Ministry of Justice confirmed it would pursue a banded structure for probate fees, which had caused uproar early 2017 and was put on hold before the general election because there was no time to pass the necessary legislation before the UK went to the polls.
The proposals, which many thought had been shelved, had been heavily criticised on the basis they could cost inheritors thousands of pounds.
The current probate system sees a flat fee of £215 paid for all estates of more than £5,000 (or £155 for those applying through a solicitor), but the MOJ said last year it planned to replace this with tiered charges ranging from £300 to £20,000, depending on the value of the estate before inheritance tax.
Mr McCann said: "Inheritance tax is deeply unpopular and fiendishly complicated. Recent changes have just added to the problem and in many instances the complexity of the rules means that families are missing out.
"IHT receipts have been maintaining a record pace for a couple of years but executors who are wary of the proposed new probate fees, which would see some estates pay thousands more from April, may choose to rush through the paperwork before they are implemented."
Mr McCann said the last time an increase in probate fees was proposed, there was a spike in IHT receipts from March to May 2017 as people tried to avoid an increase that ultimately failed to materialise.
Mr McCann added: "IHT rules are complex and filling in the forms is often not straightforward, so it’s critical that DIY executors take their time and seek advice if in doubt."
rachel.addison@ft.com
