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What ever happened to the government’s new ‘death tax’?

In February 2017, the government announced plans to introduce a tiered fee for obtaining the grant of probate upon death based on the value of the estate. The existing fee is either £155 (for applications by a professional body) or £215 (if applied for by an individual) regardless of the value of the deceased’s estate.

Here’s how the proposed fees would have looked:

Value of estate                                      New fee
Up to £50,000                                                  £0
Over £50,000 up to £300,000              £300
Over £300,000 up to £500,000           £1,000
Over £500,000 up to £1 million            £4,000
Over £1 million up to £1.6 million        £8,000
Over £1.6 million up to £2 million       £12,000
Over £2 million                                               £20,000

The fees were widely denounced by solicitors who claimed that the fees amounted to a ‘stealth tax’. Solicitors recently told the Law Gazette that the increased fees could potentially be very damaging to law firms. The fees are often covered upfront by law firms who later recoup the fee from the estate, but many law firms would be reluctant or unable to cover a fee of up to £20,000.

A parliamentary committee that considers statutory instruments questioned the legal basis of the fees, suggesting that the lord chancellor could be acting ultra vires. Kings Court Trust released a statement adding to the criticism, which would have been at odds with our ethos of basing fees on the legal work involved, rather than the money in the estate. As Jacob Rees-Mogg MP succinctly put it in a parliamentary debate on the budget. “Probate charges should relate to the cost of the probate work, which is broadly irrelevant to the size of the estate.”

Parliament was dissolved on the 3rd of May before the overhaul could be approved by both houses. The Guardian wrote in April "Political sources suggested that the level of opposition to the fee increases – in effect a wealth tax – is too great for it to be reintroduced after the election."

There has certainly been no mention of the changes being re-introduced since the re-election of the Conservative party in June. The scheme itself was authorised by then Secretary of State for Environment, Food and Rural Affairs Elizabeth Truss MP, a role now held by Michael Gove MP, who appears to have more pressing demands on his working hours. There was also no mention of the reforms in the Autumn 2017 budget.

However, as The Guardian points out, the scheme was due to raise funds for improving the judiciary system and "If dumped, another source of revenue may be required by the MoJ to replace the projected £300m income the changes would have raised." They went on to say "Compared with her predecessors, Truss has been successful in securing new funds from the Treasury, but finance ministers may resist covering such a large shortfall solely from central funds."

Kings Court Trust will remain vigilant on any changes and publish updates accordingly. 
 

Sources:

http://www.kctrust.co.uk/blog/2017/could-the-increase-in-probate-fees-be-unlawful

https://www.judiciary.gov.uk/wp-content/uploads/2016/09/narrative.pdf

http://home.bt.com/lifestyle/money/mortgages-bills/government-announces-major-changes-to-probate-fees-11364160919286

https://www.lawgazette.co.uk/law/election-could-kill-probate-fee-tax-/5060733.article

https://www.theguardian.com/money/2017/apr/21/government-drops-plan-to-raise-probate-fees

https://www.lawgazette.co.uk/news/budget-preview-digging-up-the-death-tax-would-damage-law-firms-/5063758.article