A tax on the bereaved: increased probate court fees

A banded system for probate court fees, tantamount to “a tax on the bereaved”, is back on the agenda for the government following their last ‘U’ turn on this topic in the run up to the last general election.

The increases have been proposed to fund court services generally, but this is such an enormous change of direction that it’s going to be extremely difficult for the public to swallow. Many families will know nothing about these charges until someone close to them dies.

Despite strong objections from both the public and professionals during the last consultation process, the government is once again proposing the introduction of a banded system for applications for grants of probate based on the value of an estate. Within the highest band, estates valued over £2m will pay £6,000 in fees.

The unwelcome news of this increase has come as a surprise to the legal community who had all thought the matter had been concluded. Of the 831 individuals who responded to the earlier consultation; 810 objected. It remains disappointing that this 97.5% majority wasn’t compelling enough to scrap this ‘death tax’

The changes represent an increase of around 3750% for the highest estate value band. As a firm whose client base is largely in agriculture and land owning rural estates, it is those businesses upon which we all rely on for our national food supply and security that will be hit generation after generation.

The government response, issued on 24 February 2017, confirmed that in addition to the fee structure, there will be an increase in the threshold below which no fee is payable up to £50,000 while removing these applications from general fee remissions.

Arguments against the changes asserted that a fee should be set according to the cost of providing the service, especially as the level of administration (and therefore the cost to the Probate Service) remains the same, regardless of the estate value.

In opposition, the Senior Judiciary concluded that the existing flat fee system had been a regressive step, while the new fee structure would ease the disproportionate cost burden of a grant of probate application on lower value estates.

The focus now for those who are well advised, will be to look at the early transfer of assets to the next generation to avoid this payment. This self-defeating process will lead to a loss to the government. We will certainly be alerting our clients to the added benefit of forward planning to avoid this fee so it’s really questionable how much the government and court system will benefit.

Alternatively, it’s suggested that solicitors will be left to cover the fee – this might happen if the firm feels charitable, but most would potentially only do this on a commercial lending basis which will have implications around law firms acting as lenders. Otherwise, people will no doubt have to go to the banks who will apply their own charge.