The election has put a stop to planned increases in probate fees for England and Wales
Once a general election is called, there is usually a period known in parliamentary jargon as a ‘wash up’, during which outstanding legislation is passed, modified and passed or simply killed off, all in a matter of days. Unsurprisingly it is the more controversial proposals which generally get buried, as the timescale requires cooperation from the opposition to rush law onto the statute book.
Theresa May’s decision to call an election at seven weeks’ notice meant that all the outstanding legislation – including a 762-page Finance Bill – had to be dealt with in the space of a fortnight. One of the pieces of legislation which was dropped was “The Non-Contentious Probate Fees Order 2017”. It had reached the draft regulation stage, at which point it was proving to be anything but non-contentious.
The order would have restructured probate fees in England and Wales, moving them from a flat fee of up to £215 to a variable fee that started at £300 for estates valued at between £50,000 and £300,000 to a £20,000 fee for estates worth over £2,000,000.
The higher fees prompted the inevitable ‘new death tax’ headlines and one committee of MPs questioned their legality, arguing that the revised charges “appear … to have the hallmarks of taxes rather than fees”. Rather than face a battle for which it did not have time (nor probably the political appetite), the Ministry of Justice abandoned the legislation. It is unclear whether it will return after the election.
While the probate fee increase has disappeared, at least for the time being, the legislation introducing the new residence nil rate band came into force from April. If you have not yet reviewed your estate planning in the light of its introduction, now is the time to do so.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
The US central bank, the Federal Reserve, has increased interest rates for a third time.
This might look like a piece of modern art, but it’s not. The illustration above is what has become known as the “dot plot”. Each dot represents where a member of the US Federal Reserve’s rate-setting committee expects short term interest rates to be at the end of the year. For example, the longest line of dots in 2017 shows that nine members expect an end of year rate of around 1.35%, while the most popular ‘longer run’ estimate is 3.0%.
In March, the Federal Reserve raised its main interest rate by a well-publicised 0.25% to a band between 0.75% and 1.00%. The general view now is that 2017 will see two more increases – hence the 1.35% (actually 1.375%) line on the dot plot.
The day after the US central bank raised its rates, the Bank of England’s Monetary Policy Committee (MPC) voted 8-1 in favour on holding base rate at 0.25%. The sole dissenter, Kristin Forbes, wanted a 0.25% rate rise, but her voice will soon disappear as she leaves the MPC in June. According to the Financial Times, traders do not see the first UK rate rise happening until early 2019. The Bank is expected to ‘look through’ (that is, ignore) the rise in inflation that will occur in 2017 as the weak pound works its way through to retail prices. The latest inflation data, showing a 0.5% jump in the CPI annual rate to 2.3% for February, underlines the point.
It is now over eight years since the Bank cut rates to a fraction of 1%. The impact of such a long period of ultra-low rates has been controversial, particularly its effect on savers with cash deposits and final salary pension schemes with burgeoning liabilities.
If you need income from your capital, there are plenty of options to consider that offer more than deposit rates. For example, the average dividend yield on UK shares is around 3.5%. For more details on the income options available, do talk to us.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.
Following the significant global malware attack by WannaCry, we wanted to confirm that our systems have not been impacted.
We constantly work to maintain a high level of security on our network and will continue to closely monitor the situation.