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Election stops introduction of probate fees rise

Government reportedly drops plans to raise cost of settling financial affairs of deceased due to lack of parliamentary time before election.

 
Election stops introduction of probate fees rise

The government’s plan for a dramatic rise in probate fees is to be stopped ahead of the general election in June.

Expected to come into effect in May, the probate fee increases sees the current flat rate (£215 or £155 if using a solicitor) replaced with a banded structure where fees increase in line with the estate.

This banded structure, which starts at £50,000, means those with assets of over £1 million will have to pay probate fees of between £8,000 and £20,000.

However, the plans have drawn much criticism since they were announced at the Budget and last month MPs on the statutory instruments committee said the changes must go through parliament.

Today the BBC has reported the Ministry of Justice (MoJ) has said there is not enough time to get the legislation through parliament and so the policy will not be in place next month.

When asked by the BBC, a senior Tory refused to say if the policy would be brought back if the Tories win the upcoming general election.

If not, this would represent the second Budget reversal since chancellor Philip Hammond scrapped plans to raise national insurance contributions paid the self-employed.

Gordon Andrews, tax and financial planning expert at Old Mutual Wealth, said: 'This leaves an even larger gap in the Exchequer, which will now have to be filled.'

'The government clearly has bigger fish to fry at the moment, but raising funds from grieving families may be back on the agenda after 8 June,' said Lynne Rowland, a tax partner with Kingston Smith.

'The message seems to be that inheritance tax and the process of passing assets on death are easy targets that have been overlooked too long,' she added.

 

11 comments so far. Why not have your say?

Mickey

Apr 21, 2017 at 12:10

A terrible proposal from the Conservatives and they should be telling us that it will not go ahead with this after the General Election. Which? state that the Institute of Chartered Accountants consider the proposed increases a ‘revenue raising exercise, unrelated to the costs of the service provided’.

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Michael Greenland

Apr 21, 2017 at 15:39

It would have been far better that they were scrapped due to an outbreak of common sense rather than an inconvenient election! Stupid policy.

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bouleversee

Apr 21, 2017 at 16:51

It could be that they know they haven't got a mandate for it at the moment but will include it in the manifesto. I think freeing their hands to raise revenue without the restriction of the previous manifesto commitments is probably the main reason for the U-turn re general election now. The probate fee banded increase was a particularly inept proposal. I hope they will have the good sense to drop it permanently though they will surely introduce other unpopular measures instead.

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horshamtim

Apr 22, 2017 at 11:25

The proposals are likely to come back in a similar form, and I have made it clear before here that I think the changes are essentially fair, and they are certainly not inept.

There is a small reason for this and a large one. The small reason is that up to 1999 there was a sliding scale based on estate value, since then someone leaving £10k has paid the same as someone leaving £10m. The Probate Service has not been self-financing and has been propped up by general taxation. Under the proposals 58% of estates would pay no fees at all, another 23% would pay a bit more, and only the top 19% by value would pay noticeably more. Even then the fees are miniscule in relation to the estate - someone leaving £1m would pay 0.04%. Hardly a cue for cries of shock and outrage. While I am one of the 19%, I believe it is both selfish and greedy to expect people with less or nothing to subsidise our fees, so welcome a return to a pre-1999 system.

The big reason is simply that the Government will need to raise a lot of money during the next Parliament - we are still spending over £60BN a year more than is brought in and the demographics are pushing this inexorably in the wrong direction. Given the relentless squeeze on other programmes since 2010, there are only three areas large enough left to yield the kind of money necessary. These are the State Pension and other benefits for the over 65s, the NHS and Education. If these budgets are still to be protected it means increased taxation and/or ensuring that people pay for a range of public services they get free or which are subsidised. Frankly we better off pensioners are sitting targets, and I suspect that we will be seeing other measures that hurt much more. Probate fees are really not the issue worth screaming about.

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Michael Greenland

Apr 22, 2017 at 16:47

A pathetic response from horshamtim. I have no dispute over taxation being needed for services but be honest about it and raise taxes. You are wrong to say the probate service doses not cover its costs. The estimated cost of providing probate is £140. There is already inheritance tax on large estates and it is dishonest to pretend this is a fee.

The issue worth screaming about is stealth taxes and dishonest politicians. That moronic chancellor Gordon Brown was a master at hiding taxes and hiding his excessive expenditure I wish for more from out politicians of all sides.

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bouleversee

Apr 22, 2017 at 17:00

I totally agree with what you say, MG. The Minister made it quite clear at last week's committee meeting that these fee increases would cross subsidise other court expenses; nothing to do with probate; any such shortfalls should be recouped from general taxation not imposed on a few people paying for a simple rubber stamping service which is the same whatever the value of the estate, which will in any case be subject to IHT where appropriate.

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bouleversee

Apr 22, 2017 at 17:07

I've just happened on this article on Digital Look@

https://www.digitallook.com/news/political-news/uk-govt-drops-plans-to-introduce-death-tax--2632196.html

However, I doubt that even that will persuade Horshamtin to change his mind. Fortunately, the vast majority disagree with him.

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jeffian

Apr 22, 2017 at 19:25

"this would represent the second Budget reversal since chancellor Philip Hammond scrapped plans to raise national insurance contributions"

That's just the point; it wasn't in the Budget. It was a wheeze dreamed up by the MoJ. OK, it may well reappear after the election, but hopefully as a fiscal measure to be examined and debated in Parliament.

horshamtim is absolutely right that the underlying problem is that the deficit has to be closed and that can only mean tax rises or more savage cuts than people may be prepared to accept. There needs to be a grown-up debate about this. The top 1% (just 300,000 people) already pay 27% of income taxes; the bottom 50% make no net tax contribution at all. As horshamtim says about this probate fee/tax "58% of estates would pay no fees at all". Why not? If taxes are to rise, the trouble about loading it all onto a few at the top is that, as Dennis Healey found when he vowed to squeeze the 'rich' until the pips squeaked, the pips pretty quickly ran dry. It is madness to have 'protected budgets', to promise that certain tax rates won't rise, to guarantee that we will give away 0.7% GDP in foreign aid (whether it is required or not), guarantee the pension 'triple lock' etc. We need to decide what our priorities are, what tax revenues are required to fund those and spread the tax base across the population as appropriate, with only those at or below Living Wage being exempt. You can't have responsibility without accountability and that requires everyone who benefits from state services to pay something towards it, however small.

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Michael Greenland

Apr 22, 2017 at 20:16

JeffIan.....spot on

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Alan Selwood

Apr 22, 2017 at 22:52

MG and Jeffian - Hear, hear!

Those wishing to win elections would gain more votes by being straightforward and fair. We have had enough of devious stealth manoeuvres from Blair and Brown to last a lifetime without having to endure the spectacle of their opponents doing the same.

If you see the article in the weekend press about the outrageous amounts added to school budgets as a result of Brown's PFI scheming to conceal vast costs from the electorate in the past, you will know precisely why it's time for politicians to be honest and clear, rather than pretend and conceal, or sweep unvoteworthy items under the tattered rug in the hope that people won't know or care.

Most of the posts on this forum about pensions result from the shabby treatment of Defined Benefit Schemes by Brown and Osborne.

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horshamtim

Apr 23, 2017 at 13:34

Well the gang's all here again. If any of you had actually read the source documents for this, you would realise that there is substantial support for reverting to a sliding scale for Probate fees as previously existed, and for lifting the exempt estate bracket up from its current limit of £5k (see the Law Society's dispassionate response to the original consultation - and they represent 160,000 practitioners). There is a debate to be had over the bandings - you will never be able to please everyone on that score - and the charges at the very top end.

The only other issue is whether the fees should just cover the immediate direct costs of the probate function, or whether it should also cover the relevant part of the MoJ/HMCTS central overheads. Unfortunately Government has some way to go in accounting for its services so that the true costs of provision are all accurately identifiable. The £140 figure quoted does not include those. If a company priced its goods and services without taking account of its corporate costs etc., it would soon go out of business. My point remains that paying anything less than the true cost of a public service received means that someone, somewhere is subsidising it. If that person has less income than you, or less assets, then it is difficult to argue that the process is fair.

I don't think that is a "pathetic" comment, it is based on reason and the facts. I am always open to arguments based on these - I don't expect everyone to agree - and no Boulerversee the vast majority don't disagree with me - the complaints are coming from some of the people who would pay more.

It seems that Jeffian are I starting to agree at least on some points. In his original post on this topic he supported merging Income Tax and NI, which I agree with for several reasons. However it would mean a combined rate of 32% for basic rate taxpayers. As pensioners don't pay NI, extending the combined rate to them would mean the overall rate could be reduced. It would be more difficult to preserve our lower tax rate in such a scenario. If people are screaming about a few hundred pounds as a one-off probate fee, this would pale into insignificance against the effect of such a move. And that was my other point - if you are all screaming now, then be prepared to spend the next 5 years screaming even louder. Electorally it is becoming more popular to soak the better off.

Do I expect politicians to be honest - as long as they think that we/the newspapers will react badly to anything remotely difficult they will continue treating the public in the current way. Truth, in a Tump universe, is largely an irrelevance - it is what you can get people to believe.

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