Whatever you say about politicians, you cannot deny they are creative when it comes to finding new ways to raise taxes.
Probate fees In order to actuate a deceased person’s will, the executors of the estate need to apply for a grant of representation (probate), and pay a registration fee of £215 if the value of the estate is £5,000 or more. The Ministry of Justice wants to increase the minimum threshold to £50,000, but also raise the minimum fee to £300 for estates valued up to £300,000. However, the sting is that they propose to levy new fees for estates worth more than £300,000 on a sliding scale of up to £20,000 for an estate valued at £2,000,000 or more. A whopping 93 fold increase. Phew!
SDLT supplement Stamp Duty Land Tax was not included in the tax lock (see previous stealth taxes blog posting), so the Government is free to raise the rates or reduce the thresholds. The new SDLT supplement does both of these, by imposing a 3% charge on the entire purchase price (if more than £40,000) of a second home or buy-to-let property. The buyer of such property costing £275,000 would – until 5th April 2016 – pay an SDLT charge of £3,750. From 6th April next this will increase to £12,000 – a staggering 320% increase.
There is obviously a great planning opportunity here to bring forward the purchase of such properties and ensure exchange of contracts happens before 5th April.
Dividends tax This has been much publicised, and we have published on this already. Bottom line is that income tax was frozen in the tax lock so the Chancellor couldn’t increase the income tax on dividends. So what does he do? He introduces a new tax. This operates pretty much like income tax, applying to all dividends in excess of £5,000.
The originator of stealth taxes is generally accepted to have been Gordon Brown. George Osborne must have attended one of his master-classes! The trend seems to be towards greater complexity as new measures are added either for purely tribal political reasons or to simply extract as much as possible from the economy.