Government’s probate fee rises amount to ‘stealth inheritance tax’

The government has resurrected highly controversial plans to dramatically increase probate fees in a move condemned as a way of introducing a stealth inheritance tax.

The changes, which mean that some families will pay almost £6,000 more in probate fees, are to be introduced next April.

Unjustified and unfair

According to the government, the increase is 'necessary' to fund an effective courts and tribunals service but critics say it is unjustified and unfair, particularly on older and vulnerable people.

Previous plans to raise the fees, paid when administering someone's estate after they die, were shelved in April 2017 following pressure from organisations including Solicitors for the Elderly (SFE) a national organisation committed to providing the highest quality legal advice for older people.

Wards Solicitors' Jenny Pierce, head of the Wills, Probate and Mental Capacity team, is also on the SFE's board of directors and says she is appalled by what she sees as a way of imposing an additional inheritance tax, paid on top of the existing inheritance tax levied at 40 per cent on assets above each individual's £325,000 threshold, on bereaved families.

Sneaky stealth tax

"It's just a sneaky and underhand way of increasing inheritance tax," she adds. "This stealth tax may be lower than proposed by the government in the past but that doesn't make it any better - the probate process will not require any additional work or resources so why should people pay more for it?

"Among the hardest and most unfairly hit will be the many older and vulnerable people who have estates that have grown in value simply because property prices have increased in their lifetime Some may also have little money in the bank which could lead to difficulties in finding funds to pay the fees.

"Another danger is that when someone dies, their spouse may be deterred from obtaining probate because of the increased costs creating complications for the estate when they themselves die."

How will the new system work?

At the moment, families pay a flat probate fee of £215, or £155 if they apply through a solicitor, on estates worth more than £5,000.

The new legislation will raise the estate value threshold from £5,000 to £50,000, which means, according to the Ministry of Justice, that an extra 25,000 estates a year won't pay any probate fees at all.

However, a new sliding scale of charges on estates worth more than £50,000, will see the fees increase depending on how much the estate is worth:

• Estates worth from £50,000 to £300,000 - fee rises by £35 to £250;
• Estates worth from £300,000 to £500,000 - fee rises by £535 to £750;
• Estates worth from £500,000 to £1 million - fee rises by £2,285 to £2,500;
• Estates worth from £1 million to £1.6 million - fee rises by £3,785 to £4,000;
• Estates worth from £1.6 million to £2 million - fee rises by £4,785 to £5,000;
• Estates worth more than £2 million - fee rises by £5,785 to £6,000.

Progressive - or a distraction?

Lucy Frazer MP, Parliamentary Under-Secretary for the Ministry of Justice, claims the new, banded fee system, is a 'fair and more progressive way' of paying for probate services reflecting the government's 'commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system'.

The Law Society, however, refutes this with president Christina Blacklaws condemning the government's move as 'an attempt to distract from wider problems'.

She added: "The government had an opportunity in the budget just last week (October 2018) to increase funding for the justice system after almost a decade of austerity. Instead they chose to continue cuts which have seen thousands denied the ability to access.

"The last time the government proposed a change in fees there was widespread condemnation from both the legal profession and consumers.

"To make it worse, the government is trying to avoid the scrutiny of parliament by introducing the changes via statutory instrument. They can call it a service charge or a graduated fee but what it amounts to is an additional inheritance tax."

The majority of Wards Solicitors' probate team lawyers are either student or full members of SFE. Full members hold the Certificate in Older Client Care in Practice Award. As well as being an SFE director, Jenny Pierce is the regional coordinator for Bristol and Bath and Ruth Coles is Somerset's regional coordinator. For further help and guidance, please contact Wards Solicitors' Wills, Probate and Mental Capacity team.