Inheritance Tax  

Advisers slam ‘absurd’ probate fee increase

Advisers slam ‘absurd’ probate fee increase

Advisers have called the government's plans to overhaul probate fees "absurd" and "unjustified" warning some 230,000 families will be hit with higher fees as a result. 

The Ministry of Justice announced earlier this month it will pursue a banded structure for probate fees.

The current system sees a flat fee of £215 paid for all estates of more than £5,000 (or £155 for those applying through a solicitor), but the MOJ had said last year it planned to replace this with tiered charges ranging from £300 to £20,000, depending on the value of the estate before inheritance tax.

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The charge will be calculated on the whole estate of a deceased person prior to the deduction of inheritance tax, and will include jointly owned assets.

No fee will be payable on estates below £50,000, but a probate fee of 0.5 per cent will now apply on estates valued at more than £50,000, with a cap of £6,000 for estates worth more than £2m.

The MoJ claimed the fee increase, which had been put on hold before the general election after causing an uproar, was necessary to fund the work of the courts and tribunals.

National adviser LEBC warned the move would mean approximately 230,000 families a year would have to pay more to access their loved one’s assets.

Kay Ingram, director of public policy at LEBC, said: "Solicitors tell us there is no difference whatsoever in the work required based on value, so the extra charges cannot be justified on grounds of cost.

"Many solicitors presently pay the fee up front and recover it later, but it is unlikely they will be able to do so once the fees increase. This change constitutes a tax on the bereaved, and we expect many families to face financial difficulties as a result."

She said executors already found applying for probate burdensome and overcomplicated, and the MoJ fee hike would only add to the difficulties faced by bereaved families.

The probate increase comes on the heels of the government's review of inheritance tax, the first part of which was published by the Office of Tax Simplification last week.

The review is designed to make the system less complicated and last week's report recommended the government should move to a fully digital system for inheritance tax.

Jane Berney, business law manager at the Institute of Chartered Accountants in England and Wales (ICAEW), said the higher probate fees were "disproportionate" to the service provided as more and more services are being automated at a lower running cost.

She said when the MoJ first consulted on changes to probate in 2016, 97 per cent of respondents were against them.

She also noted the parliamentary joint committee on Statutory Instruments (SI), made up of MPs and peers, had reviewed the proposals and concluded they were unlawful.

She said: "They said pushing through the increases by SI was beyond the powers of the Lord Chancellor, as the increase was equivalent to putting a new tax in place as the fees were disproportionate to the service provided.