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New death tax to hit grieving families: Fury as ministers hike probate costs from £215 to as much as £6,000

Daily Mail logo Daily Mail 05/11/2018 Victoria Bischoff Money Mail Editor
Grieving families will be hit with a new death tax © Getty Grieving families will be hit with a new death tax

Grieving families will be hit with bills of up to £6,000 under a stealth death tax.

The cost of securing probate – legal control over a deceased’s estate – is to soar from next April.

Around 280,000 families a year will have to pay more than the current £215 fee – with 56,000 of them facing bills of £2,500 to £6,000. The Ministry of Justice is expected to rake in an extra £185million a year from the charges by 2022-23.

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Charities, legal groups and campaigners last night accused ministers of sneaking in an extra tax just a week after the Budget.

Liberal Democrat leader Sir Vince Cable called the increase ‘astronomic’, adding: ‘It has the potential to cause a lot of families a great deal of difficulty.’

Liberal Democrat leader Sir Vince Cable © Reuters Liberal Democrat leader Sir Vince Cable

Steve Webb, a former pensions minister and now policy chief at investment firm Royal London, said: ‘Last week the Chancellor apparently had plenty of money to spend on everything from potholes to public toilets.

‘But this week we see the Government sneaking out an announcement about a new tax on recently bereaved families. If there was money to spare, most people would think making life simpler for people who have just lost a loved one should have been a bigger priority.’

Bereaved families must apply for probate to administer their loved ones’ finances when they die. There is a fixed fee of £215 – or £155 for families who use a solicitor.

But the Government is linking the charge to the size of the estate, with the levy ranging from £250 to as much as £6,000 for wealth estimated at over £2million. Inheritances of less than £50,000 will be exempt – compared with the current and less generous threshold of £5,000.

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The Ministry of Justice insists the fees will never be more than 0.5 per cent of the value of an estate and says 25,000 more families will escape the fee each year.

But for wealth estimated at £500,001 the new bill will be £2,500. One in five families who pay fees will need to find at least this amount.

The fees are lower than those proposed by the Government in 2017, when bills were projected to rise as high as £20,000. Executors will have to pay the fee up front before reclaiming it from the estate once probate has been granted. 

Money Mail revealed that officials had expected some grieving families would have to resort to loans to cover the fees.

George Hodgson of the Society of Trust and Estate Practitioners said last night: ‘Probate fees were supposed to cover the cost of a service.

‘Now it seems the Government wants to turn probate fees into an extra death tax. And although the Government has reduced the charges, it has not dealt with the fundamental principle of using bereaved families to prop up the legal system.’

Lakshmi Turner of Solicitors for the Elderly said: ‘This stealth tax, although much lower than before, is still unjustifiable as the probate process will not require additional work or resources.

‘It’s extremely unclear how the executors will pay the fees and there remain a lot of unanswered questions around how the money will be recovered from the estate, as assets are frozen until the executors receive grant of probate.’

When changes to the probate system were first proposed last year, a cross-party parliamentary committee warned that the new fees might be unlawful.

The Joint Committee on Statutory Instruments told the Ministry of Justice the fee should cover the cost of providing the service and not represent a tax. By law, Parliament has to vote before any new tax can be introduced.

Rachael Griffin, a tax and financial planning expert at investment firm Quilter, said: ‘It’s hard not to see this as a stealth tax on those who already pay inheritance tax.’

But justice minister Lucy Frazer said: ‘We have listened closely to concerns around early proposals. Fees will never be more than 0.5 per cent of the estate’s value, and are recoverable from the estate.

‘Fees will be set at a level to ensure that they will only be paid by those who can afford them, with all income going directly to our courts and tribunals – ensuring justice is done, and protecting victims and vulnerable people.’

The Ministry of Justice insisted the fee was not a tax and would help plug a shortfall in the £1.6billion cost of the courts service. It added that it would publish ‘guidance on ways to pay’.

Probate must typically be granted before families can release any money from an estate – for example by selling a house.


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