Middle class face another tax raid – on probate fees

Flat rate of £215 faces the axe ... for new charges of up to £20k!

MIDDLE-class families will be hit by higher tax bills when their loved ones die under plans to push up probate fees. Ministers have announced proposals to ramp up the charges by as much as 93 times the current flat rate of £215.

The switch to a sliding scale would hit middle-class homeowners the hardest. Under the scheme, the fee to gain a grant of probate would jump to £300 for estates worth £50,000 to £300,000.

This rises to £1,000 for estates worth £300,000 to £500,000 and to £4,000 for those worth £500,000 to £1million.

Financial experts condemned the changes as a ‘sneaky and backdoor’ way of raising taxes on families to bring £250million into the Treasury.

The plans mean the families of homeowners whose properties are worth the

‘Over and above a fair rise’

average in England of £301,000 face a charge nearly five times the current rate. The money will have to be paid from the estate of the deceased.

Executors dealing with property in London, where the average house price is £536,000, will be charged more than 18 times the current rate.

Estates of £1million-plus will face fees of £12,000 – nearly 56 times the rate at the moment.

Families of those who have left assets of £2million or more will be billed £20,000, which is 93 times the current charge.

The proposals were unveiled on a busy day for politics when negotiations on an EU deal for Britain dominated headlines.

Criticising the plans, Stuart Phillips, of financial planners The Private Office, said: ‘It is effectively an additional inheritance tax on middleclass families.

‘ This is a sneaky way of increasing inheritance tax through the back door. These levels are over and above a fair rise – my breath is taken away by how large they are. Once you consider that people have to pay legal fees and inheritance tax, it seems incredibly mean- spirited to charge this level of fee.’ Justin Modray, of Candid Money, added: ‘It seems a very cynical move designed to rake in extra money as opposed to a fair deal for those who have had the misfortune to lose a loved one. ‘In the South East, house prices alone are going to push most people into the higher fees – and that is before any other costs like inheritance tax or legal fees.’ ‘ It makes dying a more expensive business and it is imposing unfair taxes on death.’

The Ministry of Justice said the measures would lift 30,000 estates out of paying any fee because the threshold for paying will be raised from the current level of £5,000 to £50,000.

Officials said this meant 57 per cent of estates would pay no fee with a further 27 per cent paying £300.

A grant of probate is necessary as it gives authority to deal with the deceased’s property, money and possessions.

It is usually sought by the executor of a will or a person acting on their behalf. Around half of deaths lead to an appli- cation for a grant of probate in England and Wales.

Justice Minister Shailesh Vara said the maximum would ‘ only be paid by the very wealthiest estates’ which made up only 6 per cent of all estates.

He added: ‘These proposals are progressive, with lower value estates lifted out of paying any fee and other estates only paying more as the value of estate increases.

‘ They are also necessary, making a significant contribution to reducing the deficit and enabling investment which will transform the courts and tribunals service.’