SIMON LAMBERT: The Government's been rumbled by its own watchdog sneaking in a death tax - it should reverse the 2,700% probate fee hi
SIMON LAMBERT: The Government’s been rumbled by its own watchdog sneaking in a death tax – it should reverse the 2,700% probate fee hike
Simon Lambert for Thisismoney.co.uk
The Government’s decision to shove through a £155million raid on bereaved families is a pretty disgraceful move.
A Tory government that has previously lambasted its Labour opposition with claims that it would bring in a death tax is insisting on sneaking in a massive hike in probate fees.
This will see the cost for some estates rise by 2,700 per cent from £125 to £6,000, but the Government has sought to get away with that by classifying it as a fee not a tax – meaning it can be waved through without a vote or debate in parliament.
In a chapter straight out of the Modern Book of British Political Blundering, the row over this took another farcical turn yesterday when in its Spring Statement documents the Government’s own spending watchdog, the Office for Budget Responsibility, said that it was a tax.
The Government has been accused of targeting the bereaved with massive probate fee hikes
It said: ‘The Treasury expects the ONS to classify the new structure – with its 2,700 per cent increase in cost for estates valued over £2million – as a tax in the National Accounts.’
The OBR also revealed it would rake in ‘£155million a year in additional tax receipts’ and be hefty enough to distort behaviour and drag down inheritance tax receipts by £5million ‘due to the incentive for individuals with estates worth close to thresholds in the new probate fee structure to reduce the value of their estates (through genuine or contrived means) to pay a lower fee.’
The increase arrives in April and will see the cost of applying for probate on an estate rocket from a flat £215 to between £250 and £6,000.
The Government’s defence is that only larger estates will pay more, as the fees will now be graded: on estates up to £500,000 it will be £750, on those between that level and £1million it will be £2,500, and then between £1million and £2million fees step up to £4,000, £5,000 and £6,000.
In a way it could be worse. When I wrote about these colossal probate fee hikes when they were first proposed the Government wanted to hike them by up to 9,200 per cent to as much as £20,000.
It’s worth noting that this is not a charge for carrying out probate.
All the work in collecting the deceased’s financial details, adding up their estate and filling in the reams of forms needed for probate will already have been done by the executor.
I’ve had the misfortune of completing probate in recent years, both as an executor for my dad and then helping with my grandmother’s estate, and so I’m fully aware of how unnecessarily complicated and time-consuming the process is.
I also know that after you’ve done all that work, probate fees are paid for a glorified rubber stamping exercise.
It mystifies me why the Government is insisting on pushing ahead with what feels like a kick in the teeth for the bereaved but in the grand scheme of the public finances is a drop in the ocean.
When a consultation was run on hiking probate fees only 2 per cent of those responding said it was a good idea. It even had the opportunity to quietly drop this in 2017 and didn’t.
Quite how the Government can defend its behaviour in claiming this is not a tax to get it through has always been beyond me.
It looks like it just got rumbled.
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