Probate fees dispute update

5 November 2018

The Government has laid before Parliament new legislation to implement a new, banded structure of fees for a grant of representation, commonly known as a grant of probate.

The Government press release notes that concerns were previously raised about this proposal (see below), suggesting that it has listened to these very carefully, confirming that the revised fees will never be more than 0.5% of the value of the estate.

At present the fee for probate is a flat £215 for individuals and £155 for those applying through a solicitor. Estates valued at under £5,000 are exempted

Under a new banded structure the maximum fee will be £6,000, payable on estates worth more than £2m. This is a 70% reduction on the £20,000 cap planned for this category last year. The government will increase the value threshold from £5,000 to £50,000.

The MoJ said it will publish a guidance document before the Statutory Instrument comes into force.

CTG Observer Member, Nicola Evans, Charities Counsel at BDB has been working closely with us on this issue and commented:

“The Government should be transparent about what it is trying to do here, which is to replace the current fixed fee with a new probate tax designed to subsidise other parts of the courts system.  Tinkering with the figures does not change that.  The structure of the “fee” is the same as it was in 2017, when the Spring Budget papers admitted it would be classified as a tax in the National Accounts and when a Parliamentary Committee raised serious concerns at an attempt to raise taxation without Parliament’s consent.

If passed, the new tax will side-step the long-established exemptions and reliefs of the inheritance tax regime, including the charity exemption.  Astonishingly, the Government’s impact assessment does not try to assess the cost to the charity sector, instead brushing it off as “not expected to be substantial”.”

11 July 2017

CTG Vice-Chairman, Richard Bray, was today a signatory to a letter to the Times, co-ordinated by the Institute of Legacy Management calling on the Government to rule out completely postponed plans to increase probate fees.

 

21 April 2017

Plans to raise the legal fees payable after death have been scrapped ahead of the general election. The Ministry of Justice has said there is now not enough time for the legislation to go through Parliament. It remains to be seen whether the new Government will revisit this issue after the election. This is a welcome development as the additional costs could have resulted in reduced overall legacy values for charities.

6 April 2017

The Joint Committee on Statutory Instruments has drawn the special attention of both Houses to the draft Non-Contentious Probate Fees Order 2017 on the grounds that, if it is approved and made, there will be a doubt whether it is intra vires, and that it would in any event make an unexpected use of the power conferred by the enabling Act. Full details of the session can be read here.

The Committee has indicated that the Lord Chancellor might be overstepping her powers by introducing the charges, described by critics as a death tax. The rises have the “hallmarks of taxes rather than fees”, the Committee said, given that payments would increase from £155 to £20,000 for larger estates. The report said that the changes could breach the constitutional principle that there should be no taxation without the consent of parliament. It called for the proposals to “have the attention” of both houses.

The new scales are due to raise £300 million to fund the courts and tribunal service and replace the present flat-rate system of charges between £155 and £215.

The proposed fees were strongly opposed by almost all who responded to the consultation, and an online petition “To reconsider the proposed significant and unreasonable increase in probate fees” has gathered almost 34,000 signatures.

The Government recently responded to the petition confirming it intends to proceed as planned:

The Government is reforming fees for grants of probate by replacing flat fees with a new fairer and proportionate tiered structure, where the fee payable relates to the value of the estate. The best way to protect access to justice in the long term is with a properly funded justice system that is easy for ordinary people to use.

In 2015/16, Her Majesty’s Courts and Tribunals Service cost around £1.9 billion to run, with only around £700m recovered in fees. We do not believe that the taxpayer should continue to meet all of this cost, and it is fair to ask those who can afford it to contribute more. Parliament has given Lord Chancellor the power to set certain fees, including probate, above cost-recovery levels, and the income raised is ring-fenced to fund an efficient and effective court and tribunal system.

Under our new probate fee structure, more than half of all estates will pay no fee at all. This includes an extra 25,000 estates who will no longer pay fees under our plans to raise the fee threshold from £5,000 to £50,000 estate value. A fee will not be payable if a married couple or civil partners held their assets jointly, as on the death of the first spouse or partner the assets would pass to the surviving spouse directly without a grant of probate being required.

Under our proposals, over 90% of estates will pay £1,000 or less. No fee will be more than 1% of the total value of the estate. This is fair and proportionate. There are a number of ways that executors will be able to fund the new fees. The cost of the fee is recoverable from the estate, and executors have a number of options to fund it – no fee should be unaffordable. We expect that in most cases, banks will release cash from the estate to pay for the fee.

The Probate Service will also be able to provide access for executors to the assets of the estate for the purpose of paying the necessary fee, and other avenues of funding will also be available. In exceptional circumstances where this is not possible or appropriate the Lord Chancellor retains the power to remit the fee.