Probate fee ‘Stealth Tax’ confirmed as Ministry of Justice targets wealthy families
28 February 2017
Bereaved families face being hit with increases of over 9,000% to probate fees, as Government ‘stealth taxes’ continue to target the wealthy, says Wilsons, a leading private client law firm.
Wilsons explains that the Ministry of Justice has confirmed that it will increase the probate fee to £20,000 for estates worth over £2m from May 1st this year. This is a substantial increase on the solicitors’ fee of £155 (personal application fee £215) currently charged on estates of all sizes.
Wilsons adds that the Ministry of Justice has confirmed these plans despite a 97.5% objection rate to the Government consultation.
Wilsons says that the increase in probate fees can be seen as a ‘stealth tax’ on the wealthy, as the work involved in processing a probate does not increase in line with rising estate values.
Wilsons says that many who will be affected by the probate fee hike could be asset-rich but cash-poor, making it difficult for some to cover the costs of obtaining probate.
Alison Morris, Partner at Wilsons, says: “HMRC is already seeing record levels of Inheritance Tax receipts, and these fee hikes are yet another stealth tax on the wealthy families.”
“The work involved in processing and granting probate doesn’t increase when dealing with large estates, so such a huge increase is impossible to justify, outside of the desire to increase tax income from wealthy families.”
“There is little if any extra work involved in granting probate on an estate of £5 million than there is on a £50,000 estate.”
“It’s more than likely we will see a rush to the probate registries for grants to be issues in April before the new fees come into effect, which could cause delays issuing grants.”
“The Government also suggests that solicitors acting for executors should pay the £20,000 upfront on their behalf, and be repaid from the estate. That is simply unworkable and naïve – a lot of probate cases are handled by small firms that just wouldn’t have the cash flow to do that. These plans have not been thought through properly by the Ministry of Justice.”
Wilsons explains that staff costs at the Probate Service fell from £4.7m to £4.2m between 2013 and 2015, suggesting that the £250m estimated to be raised each year by the new fees surpasses the Probate Service’s costs.