Plans to increase probate fees still represent a 'stealth tax', says Lords committee

A House of Lords scrutiny committee says the proposals are a move away from 'the principle that fees for a public service should recover the cost of providing it and no more'

Charities fear the plans could cost them dear in legacy income
Charities fear the plans could cost them dear in legacy income

A House of Lords committee has reiterated concerns that government proposals to increase probate fees are a "stealth tax" after concerns were raised that changes to the fees system could cost charities £10m a year in legacy income.

Earlier this month, Lucy Frazer, the justice minister, announced that the government was revising its previous proposals for reforming probate fees and would push ahead with removing the existing flat-rate fee of £215.

Instead, probate fee bands would be brought in, Frazer said, with estates of more than £50,000 paying between £250 and £6,000, with the maximum amount reserved for estates worth more than £2m.

But a report by the House of Lords Secondary Legislation Scrutiny Committee, published today, says the government’s proposals "bear no relation to recovering the actual cost of providing the service" and "represents a significant move away from the principle that fees for a public service should recover the cost of providing it and no more".

The Lords report also highlights that, despite the government’s proposed increases to probate fees, it has issued a separate statutory instrument to introduce an online application process for processing a grant of probate, which will cause the administrative cost per application to fall to only £9.30.

The government has claimed that the new probate fee structure would generate £145m in additional income to help cover running costs in the courts system.

It has also said that all estates valued at less than £50,000 would be exempt from any probate fees, and all fees would be less than 0.5 per cent of the total value of the estate.

Many charity sector bodies had expressed alarm at the latest proposals to reform probate, with the Institute of Legacy Management warning that charities could lose out on £10m a year in legacy income because of the "stealth tax" on estates.

The Charity Finance Group is among those to have called for charitable exemption from the new probate regime.

The Lords report says that the committee has the same concerns about the new proposals as it did when previous reforms to probate fees were attempted in 2017.

Those proposals to reform probate fees, which were abandoned last year because of the snap general election, had suggested fees of between £300 and £20,000.

The Joint Committee on Statutory Instruments said at the time that the changes should be referred back to parliament amid concerns that the changes might not be intra vires – that is, within the powers of the legislation.

The statutory instrument has relied on the Anti-social Behaviour, Crime and Policing Act 2014, which allows the government to levy "enhanced fees", but the committee says the new proposals actually amount to a "stealth tax".

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