Huge increase in probate court fees – an indirect death tax?

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Huge increase in probate court fees – an indirect death tax?

A current hot topic in the news is the increase in probate Court fees which are due to come into effect from May 2017. Currently, a £215 flat fee applies if probate is applied for by friends or family, or £155 if a solicitor completes the process. Probate is a process which is sometimes necessary when a person has died, to enable the estate to be distributed to the beneficiaries.

However, this flat rate system will be replaced by a sliding scale based on the value of an estate. Estates below £50,000 will pay nothing at all but all estates worth more than £50,000 will be forced to pay the increased Court fees as follows:

  • £50k-£300k                 £300
  • £300k-£500k               £1,000
  • £500k-£1m                  £4,000
  • £1m-£1.6m                 £8,000
  • £1.6m-£2m                 £12,000
  • Over £2m                    £20,000

The Ministry of Justice confirmed the changes, despite nearly total opposition registered in a public consultation process. They argue that the increase is necessary in order to support the Court Service, and are committed to a modern, world-leading justice system that is proportionate and accessible. An estimate given by them states that they believe that 90% of estates will pay £1,000 or less.

Although an argument for a tiered system can be made, the new Court fees are indeed a significant departure from those currently levied. In some cases there will be a huge 1,203% increase in Court fees paid. Critics argue that it is not the responsibility of the beneficiaries of an estate (normally close friends and family of the deceased or charities) to subsidise the entire Court system. Court fees should reflect the time and the expertise needed to carry the administrative task involved in processing a Grant application. The value of an estate is an irrelevance in the process. If more money is needed by the Government to improve facilities such as the Court system and they wish to achieve this by taxing inheritance then should they be open in doing so by raising Inheritance Tax instead of introducing a ‘stealth tax’?

To muddy the waters further, recent reports have confirmed that the Joint Select Committee on Statutory Instruments (made up of peers and MPs) is “doubtful” whether the Lord Chancellor actually has “the power to impose charges of the magnitude proposed”. As any form of taxation requires the consent of Parliament this could derail the planned increases, although the Ministry of Justice’s current plans remain unchanged.

Should you wish to discuss these Court fee increases and how they may affect you or your family please contact a member of the Private Client team at Rutters Solicitors.