Probate fees, which must be paid by personal representatives of estates in order to obtain a grant of probate, are set to increase significantly from May 2017; moving from the current flat amounts (£155 or £215) to a new banded system under which the probate fees would be £20,000 for estates with a value of £2 million or more.
Since the proposals were originally announced, there has been significant opposition, with critics calling the new fees a death tax, but the Ministry of Justice pressed on and promised to introduce the necessary Statutory Instrument so that the new banded system takes effect from May 2017.
However, the Parliamentary Joint Committee on Statutory Instruments (“the Committee”) has now said that the Ministry of Justice’s planned increase in probate fees should be subject to full Parliamentary scrutiny. The Committee says the new fees are a tax, rather than fees, given that the ‘fees’ may be far in excess of the amount necessary to cover the cost of the service.
The Ministry of Justice admits that new fees may be in excess of what is needed to cover the cost of the service, but believes legislation exists that permits it to set the level of court fees as it wishes, and that this need not directly relate to the cost of the service. This argument is rejected by the Committee which cites a 1921 Court of Appeal ruling which states “the important constitutional principle that there is no taxation without the consent of Parliament, which must be embodied in statute and expressed in clear terms” and believes that the Government would be acting beyond its powers if it introduces what is, in substance, a tax on estates, rather than setting probate fees.
The Government must now decide whether or not to proceed with the Statutory Instrument as planned. The Committee does not have the power to block it, but can draw Parliament’s attention to its failings and invite full Parliamentary scrutiny.
This development could lead to the new probate fees being delayed, changed, or even scrapped.
If you have any questions about probate and estate administration matters, please contact David Nash or Sarah Gray.