The cost of dying is increasing and only set to rise due to new inheritance tax reforms. This, on top of the rising cost of coffins and probate fees, means that dealing with a loved one’s death is set to become a cause of debt in the future.
The Taxpayer’s Alliance has recently published their findings on the new reforms, and estimate that between the years 2019 and 2020 the new tax reforms will earn the government £5.35 billion, the highest amount it has ever received from inheritance tax before. To put this into perspective, in 2010 the amount earned through inheritance tax was £2.7 billion. The largest jump in costs was between 2014 and 2015 when the inheritance tax jumped from £3.8 billion to £4.6 billion.
The Cost of Death
This report, titled “The Cost of Death” is one of the first comprehensive studies into the subject, and ideally the start of systematic change into a system that is targeting middle-class Britons. The report includes its findings regarding the shift to tax reforms as well as how the proposed probate rate changes will add up to costing real families across the UK.
For most, of course, inheritance tax is not an issue. The average cost of homeowners, however, sits around £405. For those families whose loved one did have an estate, and this means simply owning a home in London for many, costs rise upwards to £60,773, and with the new inheritance tax could increase even further to £61,773. This amount is not taking into consideration the average cost of a funeral in the UK, which currently ranges around £3,757, with £4,267 for burial and £3,247 for cremation.
The proposed increase to probate fees is on hold. Further, the motion to put the proposed changes does not yet have a scheduled date. If they do come into play, however, then the proposed changes will mean that the probate will switch from the flat rate of £215 to a banding system similar to how land registry fees work.
Unlike the inheritance tax, which will apply mainly to those who have a significant estate or a property in an area like London, this change to probate will affect all homeowners. The change will increase between £35 to £5,785 on top of the £215 set fee we currently see.
This change is “anti-aspirational” according to John O’Connell, who rightly believes that the changes – and the ones that have been implemented year after year – discourage families from trying to save up anything to pass on to their children. Savings, earnings, and property that has already been taxed is being eaten away a little (or in this case a lot) more every year, meaning the hard work and savings parents might have put into for the future of their families might one day be for nought.
Currently, the Taxpayer’s Alliance has taken their findings to the Ministry of Justice and to the Treasury. As a citizen of the UK, however, you can work to protect your assets by getting in touch with an inheritance lawyer to learn of your options and how you can manage your assets to ensure as much of it as possible is given to your beneficiaries.
When it comes to receiving the right inheritance, you need the experts on your side. That’s where we can help. Our team can guide you through the process of disputing or contesting a will or probate and help you to achieve the best possible outcome. Don’t hesitate to contact us today to discuss your needs.