fbpx

Probate fees: Death knell for ‘death tax’ rise?

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

“Nothing is certain”, as a famous (and over used) saying goes, “except death and taxes”.

It is perhaps no surprise that when the two coincide, such as in the current probate fees row, there is the potential for upset.

Some families find that the idea of the Treasury not only taxing people throughout their working lives but into the grave too only compounds the distress of losing a loved one.

In recent years, successive governments have been engaged in something of a tug of war over the existence of and level for Inheritance Tax (IHT).

Even so, that ongoing debate seems relatively measured and uncontroversial when compared to the status of probate.

Families are required to apply for probate in order to have the legal power to administer the estates of deceased relatives when they die.

Currently, there is a £215 charge involved for private probate applications. Those acting through a lawyer pay £60 less.

From next month, though, the fee is set to increase upwards through a sliding scale to £20,000 for estates worth in excess of £2 million.

The hike was instantly objected to by estate planning advisers but it’s only the critical scrutiny of an influential parliamentary group of MPs and peers which may place the entire initiative in jeopardy.

In comments reported by the Daily Mail, Baroness Meacher, one member of the Joint Committee on Statutory Instruments, described the probate fees rise as “a serious social justice issue”.

Together with her colleagues, she also reckoned that a change which might see some families confronted by probate rate hike of 13,000 per cent was “quite clearly a tax…and the Lord Chancellor is not permitted to impose a tax”.

The Lord Chancellor in question, Liz Truss (who also acts as the Justice Secretary), had hoped that the move would generate an extra £300 million for the Treasury.

However, the suggestion is that she has acted ultra vires – beyond the scope of her powers.

If the probate increase is, for want of a better phrase, a ‘stealth tax’ – a piece of taxation cloaked in a less questionable guise – then, as the Joint Committee has pointed out, it has to be put to a parliamentary vote.

Without wishing to be too technical, a statutory instrument – which Liz Truss had argued the amendments to the probate pricing structure should be regarded as – is delegated legislation and so doesn’t need to be considered by parliament in the same way.

She had sought to use enabling powers contained in the Anti-Social Behaviour, Crime and Policing Act of 2014 to introduce the probate rises.

The Joint Committee says that “the ball is now in the Government’s court”.

I would imagine that after one tax u-turn already in the last month (when the Chancellor, Philip Hammond, abandoned a National Insurance increase for the self-employed), having what has been dubbed “a death tax” meeting its own end is a prospect the Cabinet will be very keen to avoid.

 

If you or your clients have any queries regarding probate fees or any other aspect of estate planning or inheritance tax then please get in touch.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close