Update from HMRC’s Trusts and Estates team

HMRC’s Trusts and Estates team met with the Agents Advisory Group and Capital Taxes Liaison Group in May and provided the following updates:

Operational update

Despite the unique challenges presented by the current COVID-19 situation, inheritance tax and trusts operational areas are currently meeting all key targets and processing post and new accounts within published turnaround times.

A new webchat service was launched in May, which can be used to obtain help when completing the IHT400 forms and schedules, and to answer other inheritance tax and probate questions.

HMRC confirmed that IHT421 forms can now be emailed directly from HMRC to HM Courts and Tribunals Service. HMRC is unable to email customers due to security protocols in place, but will either reply in writing, or add a note to the calculations.

There have been periods when the Trusts Helpline call response times have increased. If you are experiencing problems getting through, you can email HMRC at trustsfeedback@hmrc.gov.uk.

Digital signatures for IHT205

HMRC confirms that the digital signature process now applies to IHT205 forms, as well at IHT400 and IHT100 forms, until further notice. It will accept IHT205 forms that are not physically signed from professional agents, if:

  • the names and personal details of the legal personal representatives are shown on the declaration page;
  • the account has been seen by all the legal personal representatives, and they all agree to be bound by the declaration;
  • the agent includes the following statement:
    ‘As the agent acting on behalf, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Return have both seen the Inheritance Tax Return and agreed to be bound by the declaration on page 8 of the form IHT205.’

The GOV.UK website has been updated to reflect these changes.

Electronic submission of IHT form update

HMRC is offering Dropbox as a temporary measure to support agents when it is not possible or practical to submit IHT400 and IHT100 accounts by post during the COVID-19 disruption.

HMRC retains full ownership of all information/data that it places in Dropbox and all information/data that an agent submits there. Only the HMRC Dropbox account holder and the HMRC security audit team can access the information.

Time limits and penalties for late filing and payment

HMRC has updated the guidance on reasonable excuse to include occasions where customers have not been able to file their accounts on time due to the impact of COVID-19.

Claim time limits for IHT reliefs

HMRC has enquired about deadlines for IHT relief claims that may be impacted by the present disruption customers are facing. The three areas which have been raised are the time limits for: relief on property sales, relief on sale of shares and instruments of variation. HMRC is continuing to monitor the position.

STEP will continue to monitor the developments and update members accordingly.

Emily Deane TEP, STEP Technical Counsel

New probate fees: a guide for the public

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UPDATE 21/04/2017: the Ministry of Justice has abandoned the new fee regime due to lack of parliamentary time prior to the 2017 General Election. See more information.

What is probate?
When someone dies, you need to get the legal right to deal with their property, money and possessions, and to do so you need a grant of representation, which is known as ‘probate’.

When is probate not needed?
Usually you won’t need to apply for probate if the estate does not include land, property or shares; if it is passing to a surviving spouse or civil partner because it was held in joint names (e.g. a joint bank account, or a home owned as ‘joint tenants’); or if the estate is valued at less than £15,000.

Each financial institution has its own rules, however, and may still require you to apply for a grant even if the value is under this threshold.

What is happening to probate fees?
In February 2017, the government announced that probate fees in England and Wales will change in May 2017 to a banded system, where fees increase with the value of the estate, replacing the current flat fees of £155 if you apply through a solicitor, or £215 for a personal application.

The proposal to link probate fees to the value of the estate was published in February 2016 and attracted overwhelming opposition. Nonetheless, the new system has been brought in, and was confirmed in the March 2017 Budget.

The fee structure as of May will therefore be as follows:

Value of Estate New Fee % Change (from £215)
Up to £5,000 £0 0%
£5,000 – £50,000 £0 -100%
£50,001 – £300,000 £300 +40%
£300,001 – £500,000 £1,000 +365%
£500,001 – £1m £4,000 +1,760%
£1m – £1.6m £8,000 +3,621%
£1.6m – £2m £12,000 +5,481%
Over £2m £20,000 +9,202%

When in May does the change kick in?
The government has not yet confirmed the exact date in May from which these changes will apply. The new fees will apply to all applications received by the probate service on or after this still-to-be-announced date in May, irrespective of the date of death. Probate registries have said that any application received within working hours of the Probate Registry before the implementation date will be charged the current fee.

What can you do?
Applying for probate takes time as you need to gather a number of documents and all the relevant information regarding the value of the estate to ensure any inheritance tax obligations are correctly accounted for. If you are very recently bereaved it may therefore be very difficult to submit a full application for probate before the new fees are implemented.

If, however, you have already started the process, you may want to try and get your probate application in before May to ensure you pay the current flat fee.

If you are applying for probate through a solicitor, your solicitor will be aware of the situation and will be doing everything they can to try to get your probate application lodged with the probate registry before the new fee structure applies.

If you are making a personal application, you should be aware of a few important points:

  • In cases where you are required to submit an IHT400 or any document for assessment by HMRC for inheritance tax purposes, many probate registries have said that it is possible for you to submit the appropriate forms to both HMRC and HMCTS Probate simultaneously. They will not issue your grant until the approved IHT421 is received, but the probate registry will mark your application as lodged. To assist them in not raising this as a query, they have advised that you clearly mark on your application that the inheritance tax document will follow after assessment.
  • A ‘full application’ for probate purposes, and therefore to qualify for the appropriate fee, must include:
    • Full oath sworn by all deponents and commissioners
    • An original will and codicil (where appropriate) endorsed by all commissioners and deponents
    • The appropriate number of correct copy wills and codicils
    • An Inland Revenue account (with the exception of IHT400s/421s where assessment is ongoing and it has been noted on the covering letter that it will follow)
    • All associated documents including any affidavit evidence required at the time of submission, renunciations, powers of attorney
    • The appropriate fee.

    Upon receipt of an application in this form prior to commencement then the existing fee will be charged.

  • If the estate you are dealing with is asset rich but cash poor, the probate registries have said that executors will be able to apply to the Probate Service to access a particular asset for the sole purpose of paying the fee. Instalment options will not be available.

Where can you get more information?
The government has not published any public information on this issue beyond the consultation documents:

In the absence of public-facing information from the government, we will continue to publish updates on this, as and when they are announced, here on the STEP Blog.

If you have any specific questions about your probate application please contact your local probate registry.

George Hodgson is Chief Executive of STEP