Tax 

Government presses ahead with probate fees "death tax"

Jenny Cutts

Jenny Cutts

Last month the House of Commons delegated legislation committee narrowly voted in favour of questionable government proposals to radically increase probate fees.

The current cost of applying for a grant of probate in England and Wales – a document giving the personal representatives legal authority to take charge over the deceased's affairs – is a flat fee of £155 for applications via a solicitor, or £215 for personal applications. This fee is not linked to the value of the estate.

Under these proposals, there will be a banded system according to the net value of the deceased’s estate, with fees of up to £4,000 for an estate over £1m, £5,000 for an estate over £1.6m, and £6,000 for an estate over £2m.

Inheriting surviving spouses and civil partners will not be exempt from these fees and the top fee represents a staggering 3,870 per cent increase.

The cost to the Probate Registry of issuing a grant of probate is not affected by the size of an estate. The current fees cover the cost of the service whether the estate is £10,000 or £10m.

The extra profit generated will not all be fed back into the probate service, but instead used to support other, underfunded, areas of the courts and tribunal service.

Unsurprisingly, this has led the proposed fees to be dubbed a "stealth tax" and, because it must be paid on top of the 40 per cent inheritance tax charge, effectively another "death tax" on wealth through the back door.

If passed, the new fees will apply to all probate applications after the date of enactment, expected to be in April 2019.

This means that those who died before April will have their estate suffer the higher fees and there will be a rush for personal representatives to push through probate applications – which can take months to prepare – ahead of the April deadline in order to benefit from the current system. 

It is also unclear how affected estates will fund the fee.

It has to be paid while assets in the estate are effectively 'frozen' and the deceased's bank accounts cannot be used unless the bank agrees to release funds early.

If the deceased has insufficient liquid assets with the majority of the wealth being in property, the personal representatives or family may need to resort to their personal funds or a loan in order to obtain the grant of probate: an added complication and cost at an already stressful time. 

The legal mechanism of introducing the reforms has also come under criticism.

Taxes must be introduced by means of an Act of Parliament so that the proposals receive proper parliamentary scrutiny and debate in the Lords and Commons.

These proposals – which the government maintain are a "fee" and not a "tax" – are being introduced by statutory instrument which means they receive far less parliamentary inspection. Statutory instruments are generally passed as a matter of course. 

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