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Debating the backdoor death tax

The government’s intended probate fee hikes are a backdoor death tax, argues Chris Partington

18 April 2017

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The findings by the joint committee on statutory instruments have confirmed what was clear to many solicitors from the outset: the government’s intended probate fee hikes are nothing more than a backdoor death tax. The committee also raised the point that the Lord Chancellor was possibly acting beyond her powers in attempting to enforce these changes.

‘The committee has a real doubt as to whether the Lord Chancellor may use a power to prescribe non-contentious probate fees for the purpose of funding services which executors do not seek to use,’ the report said.

This is the crux of the issue. Only parliament can introduce new taxation. The Ministry of Justice proposed to use the circa £250m per year generated from the rise in fees to fund the courts and tribunals service. Executors of a will would not by default use the services which the increased fees would be paying to fund. So, to introduce these hikes in this manner – akin to taxation – would be disproportionate to the service provided by the probate registry.

Clearly, the report also indicates that the committee agreed with the view of the majority of solicitors that a flat rate cost is more reflective of the work involved. The simple fact is that the administrative tasks involved in issuing a grant of representation are the same no matter what the value of the estate. Therefore, the proposed massive cost hike for higher value estates would equate to a wholly unfair tax on many people across the UK for access to what is essentially the same service.

As a result of this report, it appears the proposed increases are to be paused, for now, but we do not yet know if they will be scrapped entirely. The fees will be considered in parliament after Easter and the hope now is that the debate forces the government to re-evaluate the fees and, at the very least, find a fairer way of structuring them.

By proceeding with the intended increase, ministers would be ignoring the views of almost every respondent involved in the consultation process. However, it does appear that the MoJ currently remains steadfast in its commitment to introducing the increase in fees, albeit following the debate in parliament.

This leaves anyone applying for probate ahead of the deadline in May in a very difficult situation. It seems likely there will be some sort of delay, for an unknown length of time, while the fees are debated and a decision made by the MoJ. This means that the eventual outcome is perhaps even less clear than it was before t

his ruling. In the long run, the committee report will hopefully lead to a fairer system of probate costs. At the moment, however, it means things are very much up in the air. Without knowing what will happen, solicitors and executors would be wise to work on the basis that increases will be coming soon.

Chris Partington is head of private client at Slater Heelis and a member of Solicitors for the Elderly

@SlaterHeelisLaw www.slaterheelis.co.uk

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Private client Wills, Trusts & Probate