Probate fees change has been delayed

The replacement of a flat fee with bands, which some believe will cost the charity sector millions, was due to happen on 1 April, but there was no parliamentary time

Controversial new probate fees that could cost charities £10m a year in lost legacy income have been delayed.

The government had planned to introduce a new fee system on 1 April, but with Brexit dominating parliamentary business, this has not happened.

A Ministry of Justice spokeswoman confirmed to Third Sector today that it still planned to implement the change "as soon as parliamentary time allows". But she was unable to say when this was likely to happen.

Last month, the Institute of Fundraising, the National Council for Voluntary Organisations, the Institute of Legacy Management and Remember A Charity sent a joint letter to Lucy Frazer, the minister responsible for legal fees, suggesting an alternative proposal.

The letter urged ministers to consider introducing a reduced or discounted rate on probate fees for estates that include legacy gifts. The organisations have not yet received a reply.

The Non-Contentious Probate (Fees) Order, which was passed by a committee of MPs in February, will remove the existing flat-rate probate fee of £215 and replace it with fee bands.

Under the new system, estates of more than £50,000 will pay between £250 and £6,000, with the maximum amount reserved for estates worth more than £2m.

The ILM has estimated that this could cause charities to lose as much as £10m a year from legacies.

By classing the new system as a fee, rather than a tax, the government is able to implement it by using a statutory order, which is a secondary form of legislation that does not require a vote.

First, the government needs to schedule an approval motion in the House of Commons.

If no MPs oppose the motion, the order will be made and the new fees will come into force 21 days later.

Nicola Evans, charities counsel at the law firm BDB Pitmans, said: "It will be a relief to charities that the proposal has been delayed, but it is disappointing that the government is still planning to press on heedless of the overwhelming opposition to its planned probate tax.

"If the order passes, testamentary gifts will be taxed and millions of pounds will be lost to the charity sector."

The MoJ spokeswoman said: "Our system will see thousands of bereaved families paying no probate fees at all, protecting an additional 25,000 estates each year.

"Fees are vital to the effective running of our courts and tribunals, ensuring access to justice and protecting vulnerable victims."

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in
Follow us on:

Latest Fundraising Jobs

RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Markel

Expert Hub

Insurance advice from Markel

Charity property: could you be entitled to a huge VAT saving?

Charity property: could you be entitled to a huge VAT saving?

Promotion from Third Sector promotion

When a property is being constructed, VAT is charged at the standard rate. But if you're a charity, health body, educational institution, housing association or finance house, the work may well fall into a category that justifies zero-rating - and you could make a massive saving