Charities face a "significant reduction" in legacy income from May because of revised government probate fees, a law firm has warned.
The Ministry of Justice wants to abolish the existing £215 flat fee for probate applications and introduce a new, banded structure based on the value of an estate. Under the new system, a £500,000 estate would incur a probate fee of £4,000.
"This effectively makes the new fee a new form of tax – a probate tax, running alongside inheritance tax but, crucially, by-passing the long-established exemptions and reliefs that apply to inheritance tax, in particular the charity exemption," said Nicola Evans, charities counsel at the law firm Bircham Dyson Bell.
"The new fees would have an especially unfair impact where there are charity beneficiaries of an estate. Legacy income is an enormously important and valuable source of income for charities, but the Ministry of Justice has not costed the potential loss to the sector."
Last week the MoJ published a response to its consultation on changes to probate fees. It revealed that 695 respondents did not think a fee based on the value of an estate was fairer than a fixed fee; 63 did.
Ministers are nevertheless pressing ahead by publishing a draft statutory order with a view to introducing the new fee structure in May.
In its consultation response, Bircham Dyson Bell described the new structure as ‘"grossly unfair".
It said it would "impact directly on charity beneficiaries of estates" and "there is a risk of a significant reduction in legacy income for charities".
It also suggested it could tempt people to try to avoid payment.
Nobody at the MoJ was able to comment before publication of this story on Thursday morning.
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