Government U-turn on probate fees hike
18 Oct 2019
The Ministry of Justice (MoJ) has backtracked on long-standing plans for a substantial increase in probate fees, which will now remain at a flat rate, after proposals for a new tiered approach met with strong opposition on the grounds they amounted to a ‘stealth tax’ on bereaved families
18 Oct 2019
Plans to charge higher probate fees were set out in the Non-Contentious Probate (Fees) Order in November 2018, following earlier consultations. This proposed abandoning the existing fixed fee of £155 for grant applications made by solicitors and a charge of £215 for those made by individuals for estates valued at over £5,000.
Instead, probate fees would be calculated on a sliding scale of up to £6,000 depending on the size of the estate. An estate of £300,001 – £500,000 faced paying £750, a 249% increase, while estates of over £2m would pay £6,000.
The government also proposed raising the threshold for probate charges from £5,000 to £50,000, indicating this would take around 25,000 estates a year out of fees altogether. However, an estimated 280,000 families annually would have faced higher charges under the new system.
The government’s reasoning behind the increase was that the probate system should fund improvements to the courts service.
The MoJ had been forecast to receive an estimated £145m a year from 2019/20 once the higher fees come into effect, rising to £185m in 2022/23, with the money ringfenced to fund the courts and tribunal service. In 2016/17, the courts service cost £1.6bn in running costs but recovered less than half of that in fees (£740m).
Opposition from the public, MPs, the Law Society and other groups meant the plans were never brought to a vote, and so the fees were not introduced as originally scheduled in April 2019. The move was then put on hold following the prorogation of parliament.
Now the Lord Chancellor, Robert Buckland, has confirmed that the changes have been abandoned altogether. The MoJ will now review probate charges as part of an annual assessment of fees charged for all proceedings in civil and family courts.
An MoJ spokeswoman said: ‘Fees are necessary to properly fund our world-leading courts system, but we have listened carefully to concerns around changes to those charged for probate and will look at them again as part of a wider review to make sure all fees are fair and proportionate.’
News of the U-turn was welcomed by the groups which had campaigned against its introduction. The Law Society said: ‘We argued that the fee hike was a tax on grief, with the recently bereaved expected to bear the brunt of funding shortfalls across the courts system.
‘The plans could have caused significant cashflow problems for many, with people who are asset rich but cash poor – such as pensioners and farmers – likely to be hit especially hard.’
The professional body also said it objected to the plans on the grounds that they represented a misuse of the lord chancellor’s power to levy fees.
‘The disproportionate level of the proposed fees would have effectively amounted to a stealth tax, and the use of a statutory instrument to implement them – a route that allows less parliamentary scrutiny than formal legislation – would have set a dangerous precedent for future tax rises,’ the Law Society said.
Emily Deane, technical counsel at Step, the professional body for inheritance and trust advisers, said: ‘This follows many months of work by Step and many others to highlight the unfairness of the proposed increase, which amounted to a stealth tax on the bereaved. This at last brings an end to the uncertainty and worry that these proposals have caused to grieving families.’
By Pat Sweet