Tax & Estate Planning

Probate Fees Increases Returns to the Agenda

By November 10, 2018 No Comments

In February 2016, the Ministry of Justice (MoJ) published a consultation paper proposing to reform probate fees, replacing the current flat fee approach with a set of bands which went up to a £20,000 fee for estates valued at over £2m. The consultation provoked an outcry with 810 out of 831 respondents disagreeing with the proposed fee scale.

The Government nevertheless displayed the ultimate tin ear and announced in March 2017 that it would go ahead with the new scales from May of that year. The news prompted questions from the Parliamentary Joint Committee on Statutory Instruments about the legality of increases that were a de facto tax and could have required more than a mere statutory instrument to be put into effect. The prime minister then called her ill-fated election and with that the plans were abandoned for lack of Parliamentary time (not to mention electoral disapproval).

Now, a week after a Budget which made no mention of inheritance tax reform, the Parliamentary Under Secretary of State for Justice has issued a written statement on increases to probate fees in England & Wales. The statement did not spell out the scale, which is to be found in a draft statutory instrument. The new and old proposed scales are detailed below:

Value of estateOld ProposalNew
Up £50,000NilNil
£50,001 – £300,000£300£250
£300,001 – £500,000£1,000£750
£500,001 – £1,000,000£4,000£2,500
£1,000,000 – £1,600,000£8,000£4,000
£1,600,001 – £2,000,000£12,000£5,000
Over £2,000,000£20,000£6,000

The new scale is set to come into force 21 days after the Statutory Instrument becomes law and is expected to generate an additional £145m for the MoJ in 2019/20, about half of what the earlier proposals would have produced. As the current probate fees (£215 for an individual, £155 for solicitors) currently cover the MoJ’s costs, the argument about whether the increases constitute a tax could reappear.

The MoJ’s explanatory memorandum emphasises the overall cost of the Court Service as a justification for the increases, implicitly accepting that its action is a revenue-raising measure.

COMMENT

The ministerial statement has already provoked press criticism. In the current fractious political conditions, the Government may face challenges in pushing the increases through. The new banding offers the largest saving over the previous proposals to estates over £500,000, which could be a hard sell.