In our first blog post of 2019, we’re making our predictions on what could happen this year and the topics that we think will dominate the industry headlines. Read on to find out how increased probate fees, Inheritance Tax simplifications and Brexit could be some of the biggest stories in the year ahead.
Fees to obtain a Grant of Probate are expected to increase
In November 2018, the Ministry of Justice announced that legislation to introduce tiered probate fees had been presented before Parliament. Consequently, we expect to see some changes to probate fees coming into effect from as early as April 2019 if the legislation is passed by the government.
These potential increases in probate fees have been in the news since February 2017, when the plan to introduce a banded structure of fees based on the estate value was originally revealed. The plans were put on hold for quite some time but it now appears that the government will finally move forward with the changes during 2019.
The Ministry of Justice declared that the recommended fee model aims to keep up with today’s digital society, creates a “fair and more progressive way to pay for probate services”, and helps to fund an effective courts and tribunals service.
The current fixed fee for obtaining a Grant of Probate is £215 for individuals and £155 for professional bodies. If the proposed fees were to come into effect however, the fees will instead be based on the value of the estate as follows:
- Estates worth less than £50,000 will typically not require a Grant of Probate. The estate threshold will rise from £5,000 to £50,000 if the legislation is introduced.
- From £50,000 up to £300,000 = £250 fee
- From £300,000 up to £500,000 = £750 fee
- From £500,000 up to £1 million = £2,500 fee
- From £1 million up to £1.6 million = £4,000 fee
- From £1.6 million up to £2 million = £5,000 fee
- More than £2 million = £6,000 fee
The planned fees have recently been largely criticised by the House of Lords. Lord Marks of Henley on Thames said: “That this House declines to approve the draft Order, because it would be an abuse of the fee-levying power, since the proposed increased fees substantially exceed the cost involved in making grants of probate and would amount to a tax, which should only be introduced, if at all, by primary legislation.” The criticism received by the Lords could result in the government reconsidering the changes, although the government are not obliged to back down on their proposal.
We believe that the updated fees could be introduced this year but at present nothing is set in stone.
Inheritance Tax could be simplified from an administrative standpoint
It is expected that there could also be some changes to simplify Inheritance Tax in 2019. In November 2018, the Office of Tax Simplification (OTS) released their first report following a review of the current Inheritance Tax system. The Chancellor requested the review and the OTS provided recommendations to simplify Inheritance Tax from an administrative and technical standpoint.
The OTS recommended that “The government should implement a fully integrated digital system for Inheritance Tax”. We predict that the government will start to create a digital system this year but this will be a time-consuming task. It is probable that the government may first proceed with some of the other recommendations made by the OTS that will be quicker to implement.
These include simplifying the current Inheritance Tax forms, establishing a short form for the simplest estates, introducing an automated payment receipts system, and streamlining the probate and payment process with HM Courts and Tribunals Service.
We’re also expecting the OTS to release a second report covering wider areas of concern in spring 2019.
More legal professionals adding prices to their websites
In December 2018, the Solicitors Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC) put new rules in place to make pricing in the legal sector more transparent. Due to these rules coming into effect, more legal professionals should have already published their prices online. Therefore, we predict that consumers will be able to make more informed buying decisions when using legal services in 2019 and beyond.
The SRA’s rules apply to legal professionals that they regulate who work in certain areas, including probate and conveyancing. These firms must clearly present price information so that it is easy for consumers to understand. They must provide a total cost where possible, explain the basis of charges (hourly rate, fixed fee, etc.), highlight any expected disbursements, and state whether VAT is included.
The ‘CLC Informed Choice Rules’ require the property and probate firms they regulate to display cost and service information on their websites. Prices must be published in a prominent place on the website and should provide examples of fees for a wide range of services. Service information should indicate timescales and could include or link to reviews.
We predict that as a result of firms regulated by the SRA and CLC being required to publish prices online, we will see more legal professionals adding pricing information to their websites.
We couldn’t complete our list of what to expect in 2019 without mentioning the ever-looming Brexit. Especially as there’s already concern that there could be a skills shortage within the legal sector in the event of a no deal Brexit. Back in October 2018, the All-Party Parliamentary Group (APPG) on Legal and Constitutional Affairs published a new report following their inquiry into the effect of Brexit on the legal services sector.
The report states that “The legal services sector has profited from the ability to attract talent from across the globe, and the right to work in the European Union. It is very important that post-Brexit, a labour mobility framework which guarantees these abilities is put in place.”
Additionally, the report adds: “Securing the right future relationship with the European Union is of utmost importance. A no deal scenario would be devastating to the legal services sector, and should be avoided at all costs.”
With much uncertainty about what will happen, it’s difficult to make too many predictions about the outcome at present. However, one thing we can be sure of is that it will definitely be a popular topic of conversation throughout 2019.
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And lastly, we want to wish you a very Happy New Year! All of us at Kings Court Trust hope 2019 is a prosperous year for you and your business.