Higher probate fees ARE a tax

THE Government admitted yesterday that a controversial increase in fees for grieving families is a tax.

Probate cost increases coming in next month will hit bereaved families with bills of up to £6,000 and hand the Ministry of Justice an extra £155million each year.

Ministers were criticised after classifying the price increase as a fee and not a tax, thereby avoiding the full Commons debate and vote needed to make it law.

But buried in a 200-page report published with the Chancellor’s Spring Statement yesterday was the news that the charges would in fact be classed as a tax.

Legal experts said the issue should now be brought back before Parliament.

Bereaved relatives currently pay a flat £215 fee for probate, the charge for securing legal control over a deceased person’s estate. The increase will see almost 300,000 families face larger bills every year. The charge will rise according to an estate’s value, leaving 56,000 people having to pay £2,500 to £6,000.

Estates worth more than £2million will see a 2,700 per cent rise in the cost of probate, which will soar to the maximum £6,000.

Inheritances of less than £50,000 will be exempt under the new rules, which will help to fund the court system, compared with the current threshold of £5,000.

A fee is classed as a payment that covers the cost of a service, whereas a tax is revenue-raising and disproportionate to the cost of the services provided.

Normally, a new tax is introduced in a Parliamentary Bill that is voted on in the Commons and the Lords. Yesterday, the Office for Budget Responsibility (OBR) report said: ‘Given the structure of the fees, the Treasury expects the ONS (Office for National Statistics) to classify them as a tax on capital rather than a payment for a service.’

Emily Deane, of the inheritance professionals trade body Step, said: ‘This is a tax on bereaved families rather than a payment for a service, and its introduction should be subject to full parliamentary scrutiny, not brought in through the back door.’

The ONS said it was ‘reviewing how probate fees should be classed for statistical purposes’, adding: ‘We expect to announce a decision in the second quarter of 2019.’

The Ministry of Justice said: ‘This is not a tax. Any decision by the ONS to define it as such would be for accounting purposes.’