Experts have criticised new government plans, which will see grieving families hit with hefty bills of up to £6,000 under a stealth 'death tax'.
The cost of securing probate – legal control over a deceased's estate – is to soar from next April.
Families will face a £250 charge on estates valued at between £50,000 to £300,000, all the way through to £6,000 for those estates worth more than £2m.
This means around 280,000 families a year will have to pay more than the current £215 fee – with 56,000 of them facing bills of £2,500 to £6,000.
The Ministry of Justice is expected to rake in an extra £185m a year from the charges by 2022 to 2023.
The announcement today (November 6) has been criticised by many experts including Nick Rucker, national head of tax, trusts and estates at Irwin Mitchell LLP.
He said: "The announcement that hugely increased probate fees are going ahead in April - a new 'death tax' - is a new tax in all but name and could have serious consequences for the collection of inheritance tax.
"It is described in the minister's statement as 'a fair and more progressive way to pay for probate services,' which is misleading as the current fees cover the cost of providing this service.
The announcement that hugely increased probate fees are going ahead in April - a new 'death tax' - is a new tax in all but name and could have serious consequences for the collection of inheritance tax."It is laudable to lift the lower value estates out of paying fees at all, by raising the threshold value of estates from £5,000 to £50,000, but it is being used as a way to raise more money to 'be spent on running the courts and tribunal service' – or rather, a tax.
"It will present real problems for those who have land but don't have cash. An example would be widows where the property remained in the name of a late husband.
"In such a case no inheritance tax would be payable but a widow would still need to pay the much higher fee in order to get probate and the property transferred into her name.
"These plans are an improvement on the original ones, with the maximum fee at 0.5 per cent of the value of an estate when it was to have been up to 1 per cent, but we anticipate serious ramifications from this announcement."
Rebecca Fisher, partner in the private client group at Russell-Cooke, said the new death tax will see the dramatic increase in the fees paid by families when winding up the estate of a loved one.
She said: "Much the same as in 2017, the cost of the fee directly relates to the value of the deceased's estate.
"The feeling that it is a tax has not gone away; it is just a lower rate of tax. The current fee for a solicitor's application is £155. There will be no fee for those estates valued below £50,000.
"Estates valued between £1m and £1.6m will pay £4,000 and for those estates exceeding £2m the fee will be £6,000.
"The work undertaken by the Probate Registry to process an application is no different whether the estate is worth £50,000 or £5m. It is this issue that for many reinforces the notion of a stealth tax. This fee does not correlate with complexity.
"This issue is likely to garner further press attention and it will be interesting to see how the government responds.
"The Ministry of Justice's approach seems to be to carry on regardless in the hope that the lower fee will not result in the same backlash. It remains to be seen whether or not that will be the case."
Kusal Ariyawansa, a chartered financial planner at Manchester-based Appleton Gerrard, said: "As a percentage of the estate these additional charges are insignificant.
"It is yet another tax, meaning it should come off the final inheritance tax bill, if there is one.
"There is no surprise that inheritance tax is the most detested tax and its reform i.e. abolition is long overdue. It is nothing but a jealousy tax."
Despite the backlash, secretary of state for justice Lucy Frazer QC MP added the government will raise the estate value threshold from £5,000 to £50,000, which will lift around 25,000 estates annually out of fees altogether.
She said: "For those who do pay, around 80 per cent of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service."
aamina.zafar@ft.com
