Probate fee hike delayed by Brexit

Controversial plans to change the flat probate fee structure to one based on the size of estate have been delayed. 

The new probate fee structure set to be introduced on 1 April has been delayed due to the ongoing Brexit tribulations in Parliament.

In November 2018, the government pressed on with controversial plans to change the flat probate fee structure to one based on the size of estate.

While fees will be abolished for estates under £50,000, the changes could cost families up to £6,000, raising around £155 million a year for the government.

The Ministry of Justice (MoJ) has told Moneywise that the new probate fee structure will not be introduced on 1 April.

This is because the new fee still needs to be approved by Parliament.

Due to the ongoing discussions on Britain’s exit from the EU, the MoJ has not yet been able to schedule an approval motion.

Once it passes this stage, the new fees will come into force 21 days later.

Rachael Griffin, tax and financial planning expert at Quilter, says that the delay will give those trying who were to rush probate cases through before the deadline more time.

She says: “However, there shouldn’t be any premature celebrations as this seems to be a short reprieve at best. It still remains the case that people should expect to be hit in the future by what lots are calling a stealth tax.

“The much-maligned increase could still become reality as soon as the government has the capacity to deal with anything other than Brexit.

"As the Delegated Legislation Committee chose not block the MoJ’s plan it means it can pass through the House of Commons as a statutory instrument rather as primary legislation and therefore requires less parliamentary scrutiny.

“For those against the increase there is some light on the horizon as there are suggestions that Labour is going to seek to block the issue.”

Probate fees give legal control to the family over the estate of someone when they pass away.

Currently, a flat fee of £215 applies in England and Wales - or £155 if you use a solicitor – on estates above £5,000.

The threshold is set to be lifted to £50,000 – exempting 25,000 estates annually from fees, according to the MoJ.

However, if the estate is valued above this you will see a rise in probate fees. Estates valued between £50,000 to £300,000 will be charged £250, going up to a maximum £6,000 for estates more than £2 million.

Those with larger estates could see costs soar. According to figures from Quilter, a £500,000 estate would pay more than 10 times the current fee at £2,500, while those in the top tier pay 3,771% more.

Ms Griffin adds: “Under the proposals estates are effectively being double-taxed – once for inheritance tax of 40% above the nil rate band and then again through tiered probate fees. If the government want to do this it should be conducted in a transparent way and not through a back door fee hike.

“Although the MoJ is presenting this as a fee which covers the cost of processing probate cases, in reality it is far closer to a tax mechanism.”

Size of estate Probate charge Better or worse off?* 
Up to £50,000 No charge Will save £215
£50,000- £300,000 £250 Rise of £35
£300,000- £500,000 £750 Rise of £535
£500,000 to £1m £2,500 Rise of £2,285
£1m to £1.6m £4,000 Rise of £3,785
£1.6m- £2m £5,000 Rise of £4,785
Above £2m £6,000 Rise of £5,785

*Compared to current system. Source: MOJ

- This article was originally written by our sister publication Moneywise.


Subscribe to Money Observer Magazine

Be the first to receive expert investment news and analysis of shares, funds, regions and strategies we expect to deliver top returns, plus free access to the digital issues on your desktop or via the Money Observer App.

Subscribe now

Add new comment