Bereaved families ‘could face fees of up to £20,000’ under new probate plans

Millions of families potentially face a large rise in probate fees payable after death, under proposed changes. These new fees will raise an estimated £250 million for the Exchequer.

Under the new tiered system, those with sizeable estates could face maximum fees of £20,000 if the value of their estate exceeds £2 million.

For many families, the rise in probate fees constitutes a potential 129-fold increase.

Government ministers have claimed that alterations to the probate fees charged to actuate a Will would ensure a fairer system, under which many poorer families may no longer have to pay.

Currently, fees are charged at flat rates of £155 or £215.

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These fees are imposed on estates worth more than £5,000. However, this figure is set to rise to £50,000. Such an increase means that some 57% of estates will pay nothing. Under the current rules, only those with estates worth less than £5,000 do not have to pay fees for probate.

Individuals with estates worth over £50,000, however, will pay significantly higher fees, ranging from £300 to a maximum of £20,000.

The Ministry of Justice has stated that a mere 1% of estates will have to pay the maximum fee of £20,000.

A spokesperson for the Ministry of Justice said: ‘Court fees are never popular but they are necessary. We have got to make sure our courts and tribunals are properly funded at the same time as cutting the budget deficit’.

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Taxes and charges make savings decisions difficult, suggests IFS

The Institute for Fiscal Studies (IFS) has suggested that individuals face a complex and ever-changing range of tax treatments, which can make it difficult to select the most appropriate savings vehicle.

Additionally, the IFS claims that pensions are set to remain the most tax-efficient savings option, despite forthcoming changes to personal taxation.

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This may be partly due to the fact that, under the pensions auto-enrolment scheme, employers must match any employee contributions. This has resulted in a potential boost of up to 60% to workers’ pension pots, the IFS reported.

The Institute compared saving via a pension to purchasing a house, paying into an ISA, and investing in buy-to-let property.

The report also considered the changes to dividend taxation and the introduction of the new Personal Savings Allowance (PSA), alongside any potential changes to pension taxation.

Furthermore, the IFS found that minor differences in charges can outweigh the effects of certain tax treatments.

Stuart Adam, co-author of the report, stated: ‘The last few years have seen radical changes announced to the taxation of savings. These will take millions of people’s savings out of the tax net altogether. Ideally, people might make savings decisions based on the underlying risks and returns of different assets. But taxes and charges can significantly change the relative attractiveness of different savings options. If people are unsure about how taxes and charges might change, their decisions become even harder’.

Record borrowing figures as buy-to-let landlords rush to beat tax changes

Gross mortgage lending reached £17.9 billion in January this year, the highest lending total for a January since 2008, according to the Council of Mortgage Lenders (CML).

The figure is 21% higher than the £14.8 billion lent in January last year, and experts are attributing the high level of mortgage borrowing to a surge in buy-to-let landlords looking to buy properties ahead of tax changes due to be implemented in April.

From the start of the 2016/17 tax year, most landlords will pay a 3% surcharge on stamp duty on property purchases.

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The CML’s members are banks, building societies and other lenders who together undertake around 95% of all residential mortgage lending in the UK. The organisation’s economist Mohammad Jamei said: ‘Lending started the year on a positive note. Our monthly estimate is 21% higher than a year ago, with the current growth rate in lending similar to the closing months of 2015.

‘We still only see limited upside potential going forwards, as the number of properties for sale on the market remains low and affordability pressures weigh on activity. Upcoming tax changes in the buy-to-let sector are adding an element of uncertainty to the market.’

However, the CML did also partly attribute the high January borrowing figure to positive economic factors. Mr Jamei said: ‘UK market fundamentals are helping to underpin this recovery, with real wage growth, an improving labour market, competitive mortgage deals, and government schemes all supporting household demand.’

Although much higher than previous January figures, the £17.9 billion total is actually 9% lower than December’s lending total of £19.8 billion.

New report suggests the self-employed require ‘more support’

Self-employed individuals should receive more help and support in the running of their business, a new Government-commissioned report has suggested.

The review, which was led by businesswoman Julie Deane OBE, calls for self-employed workers to be given similar rights to traditional employees.

‘It is important that with the increased growth in self-employment, and the subsequent benefits that this group brings to the economy, that there are systems in place to support the self-employed in the same way as the employed,’ the report stated.

Researchers found that self-employed people now account for a record-breaking 4.6 million, or 15%, of the UK’s workforce.

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The review states that choosing to become self-employed ‘should not mean that people are disadvantaged in the support that they receive from the Government’.

Specially, the report says that the Government should consider increasing the first six weeks’ maternity allowance rate paid to self-employed workers. This would ensure that it is in line with the statutory maternity pay that employees currently receive.

The document also calls for the creation of a new ‘Adoption Allowance’ for self-employed parents who choose to adopt. The allowance would operate on the same basis as the existing statutory adoption pay scheme for other employees.

Other recommendations include increasing awareness of the advice and support that is available to self-employed individuals, along with details of shared work spaces, and offering more flexible financial solutions for those running their own business.

We can advise on a variety of issues affecting you and your business – please contact us for help and support.

HMRC defends its record on taxing multinational corporations

Following widespread media scrutiny of the rate of tax paid by Google, HMRC has taken the unusual step of issuing a press release defending its record of dealing with the search engine giant in particular, and multinational corporations in general.

The statement, or ‘factsheet’, claims to be ‘setting out some facts to help dispel myths which have arisen about how HMRC ensures compliance among multinationals’ and argues that ‘aggressive tax planning, by which some multinationals exploit the complexity of the international tax system to reduce their tax liabilities… is a global issue that requires a global solution.’

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In particular, it attacks ‘myths’ about the settlement with Google which saw the US company pay an additional £130 million in tax following a six-year investigation by HMRC. The press release states that the figure is ‘over and above the tax that they have paid for past years (or would pay for the current period were it not for HMRC’s enquiry)’, and argues that ‘the current tax charge that Google took in its accounts increased significantly from 2012, when the company first disclosed that it was under enquiry and made a provision for additional tax’.

On the wider matter of its dealings with major corporations, HMRC claims to have:

  • secured more than £100 billion of compliance revenues from all sources, of which £38 billion was from large business compliance work
  • reduced the corporation tax ‘gap’ – the tax which is due but is not paid – from 9.3% (2010 to 2011) to 6.7% (2013 to 2014) of tax liabilities
  • won more than 80% of tax avoidance cases in tax tribunals; and
  • secured almost £3.2 billion in additional tax from challenging transfer pricing arrangements of multinational companies.

HMRC also denies that there are any ‘sweetheart deals’ with multinationals or that government ministers are involved in tax investigations and negotiations.

 

Chancellor’s policy changes ‘will generate £9 billion burden’ for firms, suggests CBI

The Confederation of British Industry (CBI) has warned that the Chancellor’s upcoming policy changes could potentially create a £9 billion-a-year ‘burden’ for businesses.

The business group has calculated that schemes such as the Apprenticeship Levy, National Living Wage (NLW) and the ‘outdated’ business rates system will potentially amount to a £29 billion cost for businesses over the course of the Parliament.

The CBI’s Budget submission urges Chancellor George Osborne not to add to businesses’ ‘cumulative burden’, calling for targeted steps to support firms and their ambitions for growth.

The introduction of the Apprenticeship Levy in April 2017 could bring an estimated £11.6 billion in costs over the following five years, whilst the NLW is expected to cost businesses £12.6 billion.

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The CBI has set out a series of recommendations to assist businesses, which includes an overhaul of the UK’s business rates system, outlining a clear direction on energy policy, cutting recruitment costs and supporting investment and innovation.

The group has suggested that the business rates system should be uprated in line with Consumer Price Inflation (CPI), instead of the Retail Price Index (RPI).

Carolyn Fairbairn, CBI Director-General, stated: ‘A spate of recent Government policies, including the NLW and the Apprenticeship Levy, will cost the economy around £9 billion a year by 2020. The UK needs to be able to grow its way out of the deficit, but the danger of this rising policy burden is that it holds back businesses, particularly smaller firms.

‘In this Budget, business will want to see the Government updating the UK’s business rates system, supporting investment through the capital allowance system and equipping our world-class innovators with the tools they need to compete globally.’

Additionally, Ms Fairbairn argued that taxes introduced within last year’s Summer Budget and Autumn Statement had weighed heavily on the UK’s economy.

The Chancellor will present the 2016 Budget on Wednesday 16 March. Our website will contain a summary of the key Budget announcements – please visit regularly for more information.

New fraud taskforce launched by Home Secretary

Home Secretary Theresa May has announced a new joint taskforce designed to combat fraud in the UK.

The force will be made up of the City of London police, Financial Fraud Action UK, the Bank of England, the National Crime Agency, Cifas and bank CEOs.

The scheme aims to share intelligence and generate greater awareness for consumers of the potential risks that fraud can bring.

The taskforce will be responsible for publishing a list of the ten most-wanted criminals committing fraudulent activities.

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It will also work to pinpoint intelligence gaps, identify potential fraud victims and tackle vulnerabilities in computer systems and processes, which criminals seek to exploit.

During the 12 months to March 2015, 230,630 fraudulent offences were processed by police in England and Wales.

Furthermore, an additional 389,718 fraud-related crimes were reported by industry bodies during the same period.

The Home Secretary stated: ‘Fraud shames our financial system. It undermines the credibility of the economy, ruins businesses and causes untold distress to people of all walks of life. For too long, there has been too little understanding of the problem and too great a reluctance to take steps to tackle it.’

The latest data also reveals that CEO or ‘bogus boss’ fraud has increased over the past six months.

Steve Proffitt, Deputy Head of Action Fraud, warned businesses to be on high alert: ‘Employees should be encouraged to double check everything they do and never be rushed into transferring large amounts of money, even if they do think that it’s an important task given to them by their CEO’.