The Probate Fee Hike: A Taxing Affair

Fresh controversy has been added to the debate surrounding the fast-approaching overhaul of probate fees. The Office of Budget Responsibility (OBR) has stated that it expects the new fees to be classified as a tax – an assertion rejected by ministers.

The new structure is expected to bring HMRC an additional £155m per year in tax receipts. However, the Ministry of Justice is reaffirming its stance that the new fee structure is nota tax. Instead, it says that the money raised through the fees will go towards improving the courts and tribunals system.

Fee Hike and System Overhaul

The planned system is set to be introduced on April 1st, and will see the current flat-rate system being replaced with a banded pricing structure, with fees ranging from £250 – £6000.

In contrast, people applying for grants of probate for estates worth up to £50,000 will be exempt from any charge (the current limit for exemption is £5000).

Whereas the current system sees individuals paying £215 for probate (£155 through a solicitor) – regardless of the value of the estate – fees will rocket to £6000 for estates above the value of £2 million.

Whereas fees range from £750 – £5000 for estates between the value of £300,000 and £2m, estates between £50,000 – £300,000 will incur the charge of £250.

A Stealth Tax?

News broke in November 2018 that the government was resurrecting its plans to introduce a ‘tiered fees system’. And although significantly diluted from original proposals (which would have set the cap for probate fees at £20,000), the plans have sparked widespread outrage from disparate groups – many of whom are labelling the fees as ‘a stealth tax’.

The rate increase bears no relation to the cost for the Court service of producing a grant of probate; we at A M Davies have expressed our concerns about this to the Ministry of Justice and the Justice Minister, Lucy Fraser.

The Office of Budget Responsibility’s (OBR) description of the new probate fee structure as a tax is significant; technically, taxes have to be introduced via primary legislation, and be subject to parliamentary scrutiny. However, in this particular case, the proposed fee hike has already gone through secondary legislation as a statutory instrument; this would usually mean that unless a formal objection is raised, the new legislation would pass unchallenged. However, the Labour Party are due to formally object to the statutory instrument before 1stApril; this would lead to the proposed changes being brought in front of parliament for debate.

With the news and conversation surrounding Brexit reaching fever-pitch, it may be the case that some political figures were hoping for the amended probate fee structure to pass through legislature not only unchallenged – but unnoticed too.

But given the sensitive emotions which surround the subject of estate management, it is little wonder that the price hike is causing a ruckus.

Whether or not the proposed fee rises are introduced on 1stApril, at a later date or not at all remains to be seen.

However, the seemingly-inevitable fee-hike also serves to underline the importance of an effective and efficient approach to estate management.

Our Approach to Estate Administration

At A M Davies, we bring a practical and sensitive approach to our work in estate administration.

Our extensive experience – combined with a human touch – means that we are able to offer our clients the reassurance and comfort they need at a difficult time.

Our adaptable approach means that we will meet you in your home if you so wish, whilst evening meetings are also available. We offer a transparent service – keeping you informed throughout the entire process, putting you at ease, and keeping your best interests at heart at all times.