Government announces probate fees hike - MSE News

dales1

It is legal for the Probate Office to charge a fee for processing a Probate application, which covers its costs. But much more would be a tax, requiring parliamentary approval.
The cost of processing a Probate Application does not depend on the size of the estate, so the fee should be a flat payment.

This announcement is to increase revenue far beyond costs, and so it is a tax, and accordingly it should have been proposed in the budget for Parliamentary approval. Which is not the case. And so it should not proceed.


Dales

PS the probate "service" is already a complete disgrace. The existing fee is already outrageous. In my experience, the activity seems to consist merely of transferring clerical information from the applicant's form to the official's probate form, whilst making assorted errors en-route (and taking an excessive time to do so and thereby causing a good month's delay to the start of the executor's winding-up processes) while the civil servants drink their tea and cash in the already excessive fees.

The Probate service is shockingly poor, in my experience, and it does not deserve any increased fees or taxes.

There should certainly be no cross-subsidisation between the inefficient (but fee-paying) Probate service, and the completely inefficient courts system.

CJL

Tom99 wrote: »

Don't worry about paying the £2,500, you will get it all back.

Justice minister Lucy Frazer says the fees:

"are recoverable from the estate"

But if it is a spouse that has died and less than the inheritance tax limit passes to other people, then currently no inheritance tax is payable and the simple probate fee (£215 for a personal application) is all that is paid. Now, what amounts to a 0.5% probate tax is payable for the spouse to transfer assets into their name.

CJL

dales1 wrote: »

It is legal for the Probate Office to charge a fee for processing a Probate application, which covers its costs. But much more would be a tax, requiring parliamentary approval.
The cost of processing a Probate Application does not depend on the size of the estate, so the fee should be a flat payment.

This announcement is to increase revenue far beyond costs, and so it is a tax, and accordingly it should have been proposed in the budget for Parliamentary approval. Which is not the case. And so it should not proceed.

It appears that at the previous attempt in early 2017 to introduce the probate tax the “Joint Committee on Statutory Instruments” was of the opinion that “if it is approved and made, there will be a doubt whether it (the Statutory Instrument introducing Probate Tax) is intra vires, and that it would in any event make an unexpected use of the power conferred by the enabling Act” – see
https://www.publications.parliament.uk/pa/jt201617/jtselect/jtstatin/152/15203.htm#_idTextAnchor003


Does anyone know why the refund process for excessive fees for registering a power of attorney was started by the Ministry of Justice? I'm sure they didn't do it out of the goodness of their hearts. There must have been some finding by some body that they were not allowed to charge more than the service cost to provide. That same argument would apply to the probate service and the probate tax.


The excuse that it is used to pay for the Court Service is pathetic. Do you think that the late Tracey Cox MP's husband would have been happy to pay for her murderer to be taken through the court system if she had been murdered after this probate tax took effect?

Tom99

Tom99 wrote: »

Don't worry about paying the £2,500, you will get it all back.
Justice minister Lucy Frazer says the fees:
"are recoverable from the estate"

CJL wrote: »

But if it is a spouse that has died and less than the inheritance tax limit passes to other people, then currently no inheritance tax is payable and the simple probate fee (£215 for a personal application) is all that is paid. Now, what amounts to a 0.5% probate tax is payable for the spouse to transfer assets into their name.

My attempt at sarcasm failed!

1659

Britain used to encourage & motivate people to work hard, save, & be innovative to get on well & support themselves without any assistance from benefits. It is becoming more apparent that now those who have done that will be penalised with higher charges for Probate, (not relevant to the actual costs,) Inheritance Tax at 40%, or no help with care costs until you have approximately £23k left. The politicians seem to forget income tax was paid on wages earned in the first place, & the reward for being thrifty should not be another 'death tax!'

Keep_pedalling

1659 wrote: »

Britain used to encourage & motivate people to work hard, save, & be innovative to get on well & support themselves without any assistance from benefits. It is becoming more apparent that now those who have done that will be penalised with higher charges for Probate, (not relevant to the actual costs,) Inheritance Tax at 40%, or no help with care costs until you have approximately £23k left. The politicians seem to forget income tax was paid on wages earned in the first place, & the reward for being thrifty should not be another 'death tax!'

You ignor the fact that much of people’s net worth has not been earned but obtained through house price inflation and through inheritance. That is cirtainly the case with us.

The actual impact on those estates paying those higher rates are going to be insignificant to the beneficiaries and the actual net fee will be 40% less where IHT is involved.

The rewards for having built up significant wealth in old age is to be secure, comfortable and to not be worried about the risk ending up in an over my dead body care home because you have the means to self fund in a place and time of your choosing. That for me far outways any taxes and fees my estate is going to be hit by.

Uxb

The amount of work done by HMRC on larger estates subject to IHT is much more than done for smaller estates.
None of this is paid for anywhere in the process.
So to some extent you can say these increase probate fees for the larger estates represent a way of charging for HMRC's time in dealing with them.

Anyway if @1659 feels we are all a bit hard done by in the UK they can have a reality check by moving to countries where there is an annual wealth tax.
Until 2017 that included France where you had a annual tax if your assets were above something like Euro1.3 million.

Tom99

Uxb wrote: »

The amount of work done by HMRC on larger estates subject to IHT is much more than done for smaller estates.

I expect the 40% tax helps a little bit towards the work involved?

evenasus

What this new tax will do, is make people make sure, as much as they can, that there won't be the property/savings there for the government to get their hands on.
The sad death of my daughter-in-law's mother earlier this year gave us much for thought. What with the probate rigmarole, solicitors fees and inheritance tax to pay.

We decided to give our two middle aged sons a significant amount of our savings now, rather than wait until we're dead. Just got to make sure we live another 7 years.
As for our house? I have plans for that.

Keep_pedalling

evenasus wrote: »

What this new tax will do, is make people make sure, as much as they can, that there won't be the property/savings there for the government to get their hands on.
The sad death of my daughter-in-law's mother earlier this year gave us much for thought. What with the probate rigmarole, solicitors fees and inheritance tax to pay.

We decided to give our two middle aged sons a significant amount of our savings now, rather than wait until we're dead. Just got to make sure we live another 7 years.
As for our house? I have plans for that.

Do you really want to spend you final years broke? As a couple with children and owning your own property, you are already in the position that you will be able to leave £900k tax free, £1M if at least one of you survives another 18 months. Doing something stupid like giving your house away is likely to result in your estate paying more tax not less.

As for your existing gifts, we have done the same thing, but we have covered the possibility of not surviving 7 years with 2nd death term insurance. Very cheap If your are not too old and in good health.