Election kills probate ‘stealth tax’
21 / 04 / 2017
Controversial changes to probate fees have been scrapped ahead of the upcoming election, the government confirmed today.
The probate fee overhaul, announced earlier this year, would set fees in line with the value of the estate in question rather than the current flat fee. In some instances it would result in charges of up to £20,000 up to 129 times higher than the current flat level.
The Ministry of Justice previously said the plans were due to be considered in parliament after Easter and implemented ‘shortly after’.
However, an MoJ spokesperson confirmed today that the proposals will not have enough time to pass through parliament.
Yesterday the Gazette reported that the plans had been thrown into doubt as there was little time to approve the underpinning statutory instruments before parliament is dissolved on 3 May.
The proposals have been widely criticised, with solicitors claiming they amount to a stealth tax.
Ann Cory, senior associate at Wilsons, said: ‘The government’s decision to scrap plans to raise probate fees – which represented a tax on the wealthy in all but name – is very welcome.
‘The hope is that this is at least in some part due to the 97.5% objection rate the plans received from industry experts when under consultation – not to mention the voices of those who would have been most severely affected by them.
‘These plans would be hugely damaging to many families across the UK – especially those who are asset rich and cash poor. They would also impact on the charity sector reducing the amount gifted to them and therefore the amount available for good causes. The fact remains that the work involved in processing and granting probate doesn’t increase when dealing with large estates. There is little, if any, extra work involved in granting probate on an estate of £5 million than there is on a £50,000 estate.’
Jenny Cutts, a private client partner at Wedlake Bell, said that it should be taken as good news ‘whatever your views are on the forthcoming election’.
‘Raising the administrative fees up to £20,000 to obtain probate is a disproportionate measure which would have further burdened a large number of families. No one should have to pay this – let’s hope these controversial plans to impose a further tax on estates are ditched for good,’ she added.
Nicola Plant, partner at Thomson Snell & Passmore said: ‘We’re delighted and relieved for our clients the planned probate fee increase has been dropped, at least until after the election. It’s been a stressful time for probate practitioners and their clients leading up to the planned increase; ensuring applications were submitted before the proposed deadline of 1 May. It means we are now ahead of where we might otherwise have been administering those estates.’
Law Society president Robert Bourns added: ‘This proposal would have affected 42% of estates and would have put pressure on families when they have just suffered a bereavement so we are glad it is no longer going forward.’
Earlier this month, a parliamentary committee that considers statutory instruments attacked the legal basis of the fees, saying that the lord chancellor could be acting ultra vires in collecting money this way.
This article was first published in the Law Society Gazette on 21 April 2017.