Probate Charges are “Stealth Tax” say Opponents

This April will see the belated introduction of the new probate fee scheme, which, controversially, will result in larger estates paying up to £6,000 in fees and, in the process, enriching the government by around £150 million a year.

It is not all bad news for probate fee payers, however. Under the new regime, the lowest value estates will be exempt from any fees at all as the threshold which they become payable has been raised from £5,000 to £50,000. This means that around an extra 25,000 estates a year will be free from all probate fees.

The changes were due to come into effect in 2017 but were postponed because of the snap general election that was called that year.

Watered Down but Still Facing Potent Opposition

Admittedly, the plans are a significant scale-back from the fees initially proposed for more valuable estates. However, given that the current fees – £155 for grant applications made by solicitors and £215 for individual applications on estates worth more than £5,000 – are as much as 28 times cheaper than what some will pay have to pay come April 2019, opposition to the changes is understandable.

The parliamentary under-secretary of state for justice Lucy Frazer conceded that the plans have received widespread criticism but emphasised that they have been watered down since the proposals were first published. “The top band has now been reduced from £20,000 under the previous proposal to £6,000 under this order,” she said.

“The new banded fees structure does not amend the underlying ?policy rationale and will retain the same progressive banded structure as the earlier proposal, in which the fee payable relates to the value of the estate.”

Despite this, critics who have been consistently vocal in their opposition to the proposals, including throughout the consultation period, continue to insist that the scale of the fees bears no relation to the cost of the work involved, with probate actually costing the same regardless of the value of the estate involved.

There has been further criticism that the new fees will not be debated in parliament as they are being styled as an “enhanced fee” rather than a tax and are therefore exempt from any obligation to be debated in parliament. Critics have suggested that the distinction is at best semantic and at worst downright disingenuous.

However, Frazer remains unpersuadable. “Parliament have the power to pass the legislation by way of statutory instrument, and that is how we are doing so,” said Frazer.

Powerful Opposition

The charity sector has been one of the most vocal critics of the proposals, saying that they could have a negative impact on the value of legacy-giving to the sector.

The LEBC financial advisory group has urged consumers not to see the April introduction of the reforms as a foregone conclusion and has called for the Competition and Markets Authority (CMA) to investigate the potential impact and ability to cause “hardship and distress” to grieving families.

LEBC’s director of public policy Kay Ingram commented, “The CMA has shone a light on poor treatment of the bereaved in the field of funeral services and care homes. If, as the MoJ argues, this increase is not a tax increase, but a fee, then it deserves the same scrutiny as exploitative pricing by business. If it is a tax increase then MPs must account to their constituents for this.”

Liberal Democrat leader Vince Cable is just one of many to share this view. He has branded the fees as a “stealth tax”. Furthermore, Cable has said that ushering them in without parliamentary scrutiny is tantamount to a “clear abuse of power”.

However, last week the House of Commons’ Fourteenth Delegated Legislation Committee approved the sliding scale charges based on an estate’s value by the narrowest of margins: nine votes to eight. This means that unless there is a formal objection and vote opposing the proposals, they will come into effect in April, regardless of how unpopular they might be.

The Law Society has encouraged its members to write to their MPs to oppose what it characterises as “a misuse of the lord chancellor’s fee-levying powers”. There is surely no harm in consumers doing the same.

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