Probate fees hike scrapped ahead of election

Probate fees hike scrapped ahead of election

A planned hike in probate fees, which was described as the ‘new inheritance tax’ for large estates, has been scrapped by the government.

The move has been made because the government says there isn’t enough time to for the new rules to be approved by Parliament before the general election on 8 June. 

If a person has left a will, they usually have appointed a will executor. This executor then has to apply for a ‘grant of probate’ from the probate registry to deal with the estate.

Currently, a flat fee of £215 applies on all estates in England and Wales worth more than £50,000 (or £155 if the application is made by a solicitor).

This was {planned to change in May} with fees instead being linked to the size of the estate. Under the plans, fees were due to rise as follows:

• Estates worth less than £50,000: No fees. (This is the same as the current system.)
• Estates worth £50,001 to £300,000: Fees to rise to £300.
• Estates worth £300,001 to £500,000: Fees to rise to £1,000.
• Estates worth £500,001 to £1 million: Fees to rise to £4,000.
• Estates exceeding £1 million up to £1.6 million: Fees to rise to £8,000.
• Estates exceeding £1.6 million up to £2 million: Fees to rise to £12,000.
• Estates worth over £2 million: Fees to rise to £20,000.

However, the Ministry of Justice has today confirmed that the plans have been scrapped as it says there’s not enough time for the rules to be approved by both the House of Commons and the House of Lords before the snap general election on 8 June, which was announced this week.

It says whether the plans come into force after the general election will be a matter for the newly elected government to decide.

‘New charging structure is backdoor way of raising money’

The new fees had proved controversial as many commentators believed the amount of work involved in granting probate was the same regardless of the size of estate.

Earlier this month, Royal London director of policy, Steve Webb, accused the government of using the probate fees hike as a revenue raising measure. His comments came after a freedom of information request submitted by Mr Webb found that the government had “no legal or business requirement” to hold information on the average cost of processing probate applications. 

Webb said: 'The Government is treating bereaved families as if they were a 'nice little earner'. It is one thing to make a reasonable charge for the provision of a public service. But the Ministry of Justice has now admitted it does not know the unit cost of handling a probate application and sees no reason to find out what it is.  

'This is clear evidence that the new charging structures are nothing to do with recovering the reasonable cost of processing probate applications and are simply a backdoor way of raising money from people in their time of greatest need.  The Government should think again before going ahead with this tax hike on bereaved families.'

Gordon Andrews, tax and financial planning expert at Old Mutual Wealth, today adds: 'The U-turn on the increase to probate fees reveals concerns over the regulation’s unpopular nature. The label as a stealth tax has made it unpalatable to the government in the run up to the snap election.

'Regardless of what happens now, the current Conservative Government have drawn a line in the sand and has to some extent shown its hand – whilst these proposals have been shelved for now it will be interesting to see if the changes to probate fees are revisited after the election.'

- This article first appeared on our sister website, Moneywise.


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