Personal Finance

Probate fees hike scrapped – for now at least

Controversial changes to probate fees – dubbed by some critics as a hefty new “death tax” – have been scrapped.

“The Ministry of Justice planned to rely on existing legislation: Section 92 of the Courts Act 2003 and Section 180 of the Anti-Social Behaviour, Crime and Policing Act 2014,” says the Law Gazette.

“However, a provision in one of the bills suggests approval from both houses of parliament is needed.”

But with parliament being dissolved on 3 May because of the snap general election announced earlier this week, there will not be time to get the required approval for the scheme, which was authorised by Justice Secretary Liz Truss.

Given that the most virulent opposition to the changes have come from Conservatives, there is “no guarantee” the proposals will be revived even if the party is re-elected in June, says The Guardian.

“Political sources suggested on Friday that the level of opposition to the fee increases – in effect a wealth tax – is too great for it to be reintroduced after the election,” the paper adds. 

At the moment, when the executor of an estate worth more than £5,000 applies for a grant of probate, they pay a flat fee of either £155 if they use a solicitor or £215 if they do not.

Under the new plans, the minimum asset threshold for an estate to be free of charges would rise to £50,000, but after this charges would go from £300 for estates worth £50,000 to £300,000 and £20,000 for those worth more than £2m.

The proposals would have raised around £300m.

“If dumped, another source of revenue may be required by the MoJ to replace the projected £300m income the changes would have raised,” says the Guardian.

“Compared with her predecessors, Truss has been successful in securing new funds from the Treasury, but finance ministers may resist covering such a large shortfall solely from central funds.”

Probate fee increase ‘could be illegal’, say MPs

6 April

Government plans to increase probate fees by as much as 9,300 per cent in some cases “could be illegal”, an influential committee of MPs says.

A report from the joint committee on statutory instruments, a panel of parliamentarians including five Conservative MPs, four Labour and one Liberal Democrat, said the new charges “appear… to have the hallmarks of taxes rather than fees”.

While the reforms require the “express consent” of parliament, says the BBC, the committee has raised doubts over whether they amount to the government overstepping its powers.

At the moment, when the executor of an estate applies for a Grant of Probate, they pay a flat fee of either £155 if they use a solicitor or £215 if they do not. They must apply for a grant even if the estate is being distributed according to wishes expressed in a will, although there is no fee paid for estates worth less than £5,000.

Under the new plans, set out by Justice Secretary Liz Truss, the minimum asset threshold for an estate to be free of charges will rise from £5,000 to £50,000 but fees after this level will be charged on a sliding scale, starting at £300 for estates worth £50,000-£300,000 and rising to a maximum of £20,000 for those worth more than £2m.

The changes, which are expected to raise up to £300m, are being brought in under section 180 of the Antisocial Behaviour, Crime and Policing Act 2014, which states the government can charge fees that are higher than needed to recover costs where this will help to fund the wider courts service.

However, the committee said it doubts whether the legislation “does in express words entrust [Truss] with the power to impose charges of the magnitude proposed by the draft order”.

The Ministry of Justice is not deterred and says the new system, which will mean 57 per cent of estates pay nothing and 90 per cent less than £1,000, is fairer and will come into force as planned, subject to parliamentary approval.

It added the plans “will be considered in parliament after Easter and come into force as soon as possible”.

Probate fees: a sneaky new death tax?

21 March

Dying is about to get a lot more expensive for half the nation. The Ministry of Justice has announced that probate fees are going to increase by as much as 9,300 per cent from May, with some estates having to fork out £20,000 just to be able to release the estate to beneficiaries.

What are probate fees?

Probate fees are paid to courts to get approval for an estate to be discharged. To do this the court looks over any wills and a death certificate before granting permission to executors to distribute the estate.

How much are fees going up by?

At present fees for probate are set at £155 for those applying through a solicitor and £215 for those without legal representation. Estates worth less than £5,000 pay no fee.

In this month’s Budget it was revealed that a new fee structure will be introduced from May 2017.

Under the new system a sliding scale will be introduced with probate fees decided on the basis of the value of the estate. 

Value of estateNew feeLess than £50,000£0£50,000 to £300,000£300£300,000 to £500,000£1,000£500,000 to £1m£4,000£1m to £1.6m£8,000£1.6m to £2m£12,000£2m and above£20,000

Is this a sneaky new stealth tax? 

Many people think so. “I do not think it is right that the government should introduce stealth taxes,” Jacob Rees-Mogg MP said in a parliamentary debate on the budget.

“Probate charges should relate to the cost of the probate work, which is broadly irrelevant to the size of the estate.”

Mr Rees-Mogg is not alone in voicing his disapproval: several Tory backbenchers have raised concerns about the fee rise, with one describing it as “a death tax by any other name”.

What many find particularly galling is that the rise is going ahead despite the fact that the vast majority of respondents to a consultation on the rise opposed it.

“Out of the 829 responses to the consultation document, 63 agreed with the proposals, 695 disagreed and 71 neither agreed nor disagreed. Where is the democracy in that?” says Patrick Moroney in a letter to The Times.

Finance journalist Dan Hyde has expressed his outrage in the Daily Mail. “Even though probate is little more than a rubber stamp on a document written by a clerk, small print in the Budget last week showed it’s been reclassified on our national balance sheet as a ‘tax’ rather than a ‘fee’.

“Since when was the Government able to bring in a new tax without telling anyone?”

What’s the argument for the rise?

The Ministry for Justice has defended the huge increase in probate fees by saying 57 per cent of estates will be lifted out of paying fees.

“We are introducing a fairer banded system of probate fees which will mean more than half of estates pay nothing,” a Ministry of Justice spokesperson said. “The probate fee will always be recoverable from the estate, so executors will not end up personally out of pocket.”

Could we see another government U-turn?

There is plenty of opposition to the probate fee hike, both in the media and Parliament. One MP has already raised the issue with the Ministry of Justice and asked them to review the decision.

Another said that Parliament is “just waking up to” the consequences of the new probate fees, according to the Financial Times.

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