Dalliance with 'death tax'
3 min read
Shadow Justice Minister Lord Beecham argues that the Government must rethink its backdoor manoeuvring on probate fees.
Where there’s a will there’s a way, at least in the government’s view, to raise money by dramatically ramping up the fees for obtaining probate – in effect a death tax.
Estates under £50k would be exempt but fees on every other estate would rise – from £195 to as much as £20k on larger estates. Yet while the actual cost of the service is only £45m, the proposals would bring in an estimated £300m.
Reporting on the related Order, The Lords Committee on secondary legislation asserted that “to charge a fee so far above the actual cost of the service arguably amounts to a stealth tax” and therefore a misuse of the fee-levying power. A second report – from the Joint Committee on Statutory Instruments – questioned whether the Lord Chancellor has the legal right to use the power to prescribe such fees for purposes not required by users of the probate system, with a view to funding court and tribunal services.
The government plans to impose the increases via the Anti-Social Behaviour, Crime and Policing Act. But that second report from, incidentally, a Committee of both Houses of Parliament, highlights that the provisions of that Act do not apply to the probate service. Indeed, following exchanges with the Ministry of Justice, the Committee stated that it remained “strongly of the view that to increase the fees to this degree goes far beyond what was anticipated” when the relevant primary legislation was going through.
Beyond the legal arguments however, the Committee also raised other issues. 810 of 831 replies received during consultation thought the fees excessive, too great an increase from current rates or unjustified compared to the actual cost of the service. (A service incidentally that is mostly carried out online.) Concluding: “this is all adding bureaucracy to the current system and that many, including small firms of solicitors acting as executors, will not have sufficient funds to pay such fee up front”.
As an unpaid consultant with my old firm of solicitors, I think they have a point!
Given these trenchant criticisms, Labour Peers have made it clear to the government that we will challenge the Order, and with wide support for the Committees’ concerns from all sides of the House. As a result, the Order has been withdrawn from this week’s business – although, as with the National Insurance fiasco following the Budget, it could return to Parliament in some shape or form.
With widespread concerns about backdoor manoeuvres to fund the cost of services in the justice system and elsewhere, the government should think carefully about its next steps on this issue. Ministers would do well to heed the reports of the two Committees and back out of the current dalliance with stealth taxation.
Lord Beecham is the Opposition Spokesperson for Communities and Local Government, for Housing and for Justice.
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