UPDATE: Higher probate fees are a tax, admits the government after charge increase for grieving families was introduced to generate an extra £155 million a year
by Ben Ramanauskas, Policy Analyst
Under the innocuous sounding ‘Non-Contentious Probate (Fees Order)’, the government looks sets to push ahead with its plans to hike the fees charged for a grant of probate from the current flat rate of £215 (£155 if a solicitor is used) to a sliding scale of fees ranging from £250 to £6,000, based on the value of the estate. A grant of probate is an important legal document which allows a specified person to administer the estate of a person who has died.
Although there is a cost associated with providing the probate service to the public, this move is disturbing for a number of reasons.
First and foremost, it’s incredibly cruel. The death of a loved one is an extremely difficult event. It should not be seen as an opportunity for a greedy government to exploit grieving families. The government already levies inheritance tax on estates, and so any increase in fees means added financial pressure on the bereaved. While families are dealing with the emotional trauma of losing a close friend or relative and are busy preparing the funeral, with people sending flowers and cards, HMRC sends a bill.
Second, in technical terms, the government has admitted that the increased charges will be used, not just to provide funding for the probate service, but also to subsidise other parts of the court and tribunal service. However, there are numerous criticisms of the high costs associated with court cases and the inefficiencies in the system. Therefore, as a result of the government’s failure to run an efficient court and tribunal service, it is forcing the bereaved to subsidise it through their use of the probate service.
It is also a disproportionate increase. The level of service involved in a grant of probate is roughly equivalent, regardless of the size of the estate. Therefore, increasing the fees all the way up to £6,000 is extremely difficult to justify. What is more, it seems an excessive rise when one considers the current fee of £125 - 28 times the current amount.
It ignores the fact that the probate service is not optional for many households. Receiving an inheritance is also often unexpected and so families may not have had an opportunity to plan. This will often be the case for households on lower incomes, who do not have the resources to consult expensive solicitors. They are the people who will be most unfairly impacted.
What is more, is not just a tax, it is a stealth tax. Many people in the UK struggle with the high cost of living and often find it difficult to make ends meet. A large part of this is taxation. We already pay tax on the money we earn, the money we spend at the shops, going on holiday, filling up our cars, and on alcohol, cigarettes, and sugary drinks. Now the government wants to double the number of taxes you pay when a loved one dies. As research by the TaxPayers’ Alliance has revealed, the tax burden in the UK is already at an almost 50 year high, getting worse with each budget.
Altogether these features make it nothing more than a stealth death tax.
In light of this, it is essentially unconstitutional. This is simply a tax rise out of budget season scrutiny in the the vain hope that nobody will notice. Ever since the Barons forced King John I to sign Magna Carta in 1215, monarchs and governments have been required to to receive Parliamentary approval before levying a new tax. However, fees designed to to cover the costs of providing a service, rather than raising revenue for HM Treasury, can be introduced through a statutory instrument. Although section 180 of the Anti Social Behaviour and Crime Policing Act 2014 does allow the levying of a fee, it does not confer a power on the Lord Chancellor to impose a tax. Given the size of the increase in the fee, and the scope of what it will cover, it is obvious that it is not a fee but a tax, and so amounts to a misuse of the Lord Chancellor’s fee-levying power.
To allow the government to ride roughshod over our principles around tax raising powers would be to set a dangerous precedent for future governments. Instead of going through the normal Parliamentary procedures, the government could levy more economically harmful taxes without proper Parliamentary procedure, by claiming that the new taxes were just fees. A grim thought, indeed.
Undoubtedly, the courts and tribunal service performs a vital function. However, rather than expecting the bereaved to provide it with extra funding, it should look at ways in which it can improve efficiency. One way in which this could be achieved is through automation. Research by the TaxPayers’ Alliance found that introducing more automation into the public sector can save taxpayers up to £17 billion a year by 2030. What is more, it will free up civil servants from repetitive tasks and also allow the service to be run more efficiently.
Alongside the hated and deeply unfair inheritance tax, this stealth death tax is the height of insensitivity. We hope politicians will see sense and kill it stone dead.