The New Probate Fees: a Stealth Tax or the Cost of Modernisation?
Following a government consultation into revising probate fees in 2016, the government announced the Non-Contentious Probate (Fees) Order 2018, yet to be enacted, which will see a significant change to the charges incurred by personal representatives when applying for probate. With proposed probate fees of up to £6,000, based on the value of the deceased’s estate, compared with the current flat fee of £155 where personal representatives use a solicitor, or £215 for personal applications, questions have been raised as to whether the change is good value for money, and whether the government is levying a new, secondary inheritance tax.
The new fee regime is part of a package of measures to modernise the process of obtaining a grant, with the aim of making the process simpler. Other government agencies, however, have modernised their procedures with little or no cost to the end user. When purchasing property, deeds can be submitted to HM Land Registry using its online service. Whilst the fee is based on the value of the property, the fee for online registration is no more than £455, and half the price of a postal application. Likewise, Companies House announced in 2015 that all public information is free to access using its online service. The Ministry of Justice is bucking the trend by making its services more expensive.
As for the fees’ status as a tax, a House of Lord committee concluded that the fees were so disproportionate to the costs the government incurs that the new fees are a stealth tax. Further, it has been reported that the Treasury expects the Office for National Statistics to classify the new fees as a tax, rather than as a payment for services. Despite this, the Ministry of Justice has refused to recognise the new fees as a tax.
Whilst the reforms are intended to streamline the process of obtaining probate, so far they have had the opposite effect. The 2018 Order is yet to receive parliamentary approval, but personal representatives and solicitors have generated a backlog as they rush their applications in order to beat the rise in fees. This has forced HMRC to issue guidance on how to apply for probate before it has confirmed receipt of inheritance tax on an estate. Whatever the intention of the Ministry of Justice when it introduced these reforms, good or bad, this was not it.
By James Turner
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