Call for withdrawal of probate ‘tax’

The government’s decision to hike probate fees to over £6,000 for large estates means the charge is now classified as a new tax, and the Treasury is facing calls for the move to be debated as part of the Finance Bill

In its commentary on the economic and fiscal outlook published alongside details of the Spring Statement, the Office of Budget Responsibility (OBR) pointed out that the government has altered its proposed schedule of fees payable for an application for a grant of probate.

The new rates come into effect in April and range between £250 and £6,000, depending on the value of the estate. This represents a 2,700% increase in cost for estates valued over £2m.

The OBR highlighted that, given the structure of the fees, the Treasury expects the Office for National Statistics (ONS) to classify them as a tax on capital rather than a payment for a service.

This will add to receipts and spending equally, because the new tax is offset by the removal of the negative spending from Ministry of Justice departmental budget. The new fee structure is expected to raise around £155m a year.

The OBR reported it has reduced its inheritance tax forecast by around £5m a year to reflect the incentive for individuals with estates worth close to the new probate fee thresholds to reduce the value of their estates to pay a lower fee. This effect is expected to be small, since the inheritance tax liability itself already provides a significant incentive to reduce the value of estates.

National financial advisory firm LEBC Group is calling on the government to back down on the increase, which will see costs payable by bereaved families to the Treasury rocket from £215 to over £6,000.

Kay Ingram, director of public policy at LEBC, said: ‘The Chancellor says the public finances are in better shape and the OBR forecasts expect them to improve. There is therefore no need for government to exploit their monopoly of the probate service which gives families access to their loved one’s assets.

‘As this is now officially recognised as a tax, and not a fee, as previously maintained by the government, it should be debated as part of a Finance Bill and not waived through by nine MPs in an obscure Committee.’

Ingram argued that the government should debate the increase in Parliament, rather than attempting to ‘sneak it through without debate’.

‘We have already alerted the Competition and Markets Authority of the unfair pricing aspect of this fee hike. If the government continues to impose it from April we will ask them to investigate further,’ she added.

Report by Pat Sweet

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