Probate Fee Raise Reforms Approved
A committee of MPs has narrowly voted to approve government probate reform proposals that could see court probate charges surge from a £215 fixed rate to as much as £6,000.
The reform is set to abolish the flat rate for probate fees in favour of a band system under which fees will be set according to the value of the deceased’s estate. The current fixed rate charge for probate is £215, or £155 for those applying through a solicitor.
Under the band system, estates worth over £50,000 will be charged between £250 and £6,000 – the latter top rate applying to estates worth over £2m. The proposals are set to come into force in April via a statutory instrument, with some accusing the government of attempting to sneak the change through more easily by describing the charge as a fee rather than a tax.
Under UK law, new tax legislation must be attached to a Parliamentary Bill – generally a Finance Bill – and thus subjected to full debates in both Houses of Parliament before coming into force.
Under the statutory instrument (SI) model used by the government in this instance, now that the changes have passed by a vote of 17 MPs on the legislative committee, they will receive no further debate and only be voted on again should MPs raise an objection.
“Stealth tax” set to cost charities £10m a year
The government announced plans to resurrect its probate reform proposals to remove the current flat rate last year, after previously dropping the proposals ahead of the 2017 general election.
Charities and legal professionals alike have raised concerns over the measures, with the Institute of Legacy Management estimating that the changes could cost charities £10m in charitable bequests each year. Legacy donations currently generate almost £3bn a year for Britain’s charity sector.
The Law Society meanwhile has criticised both the content and form of the new proposals, describing the legislation as “a misuse of the lord chancellor’s fee-levying powers.”
Political adviser, Hugo Forshaw, said: “Not only is this an unfair way to squeeze money out of grieving and vulnerable families, but these fees are also not fees at all – they are a stealth tax.”
Liberal Democrat party leader Sir Vince Cable similarly criticised the advancement of the reform as a “clear abuse of executive power” which aims to “bring in a tax hike without proper parliamentary scrutiny.”
Ministers say reform will help fund courts
Ahead of their narrow 8-9 vote to approve the proposals, the legislative committee’s debate on the issue lasted under 30 minutes.
Advocating for the reform, justice minister Lucy Frazer said that the increased probate charges would help fund improvements to the courts system. The government has been working on an extensive overhaul of the HM Courts & Tribunals Service, pledging £700m towards modernising services between 2015-2020.
Some however argue that charging the probate fee dramatically higher than the actual cost of administering probate should be regarded as illegal and exploitative, with Labour MP Gloria De Piero holding:
“The proposals are clearly disproportionate and excessive, but they also make a mockery of the long-standing principle that fees for a public service should recover the cost of providing it, and no more”.
To this end, financial advisors at the LEBC Group have asked the Competition and Markets Authority (CMA) to investigate the planned reform, with a spokesperson for the group stating:
“If, as the Ministry of Justice argues, this increase is not a tax increase, but a fee, then it deserves the same scrutiny as exploitative pricing by business. If it is a tax increase then MPs must account to their constituents for this.”
It is unclear whether the competition watchdog has the power to investigate government departments however, with the CMA yet to respond to the request.
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