Plan by Ministry of Justice Dropped to increase Probate Fees
The plan to increase probate fees to up to £20,000 before the election was dropped by the government. If you are confused about what exactly this means, read on to find out everything you need to know about probate in UK.
What is Probate?
Probate is the procedure of acquiring a legal document that transfers the ownership of a deceased person’s estate over to the applicant. A probate valuation is necessary to value the estate of a deceased person and to calculate the amount of inheritance tax (if any) due to the government. The estate comprises the property, possessions and money belonging to the deceased. Even if there is no inheritance tax due, a probate valuation has to be done to help the distribution of assets amongst the people designated in the will of the deceased.
Probate fees apply to all property which falls under the category. A probate fee is the amount that an applicant is to pay to the court where he/she is applying for the grant of probate.
How is the plan affected?
In yet another attempt to increase high court fees, the Ministry of Justice had planned to sharply increase the probate fees, by way of a Statutory Instrument. The increase would have been as high as £20,000 for large estates. The proposed fees structure would have been such that estates valued up till £50,000, would not have incurred any probate fees. Estates valued at up to £2,000,000 would have incurred probate fees of £20,000.
What is a Statutory Instrument (‘SI’)?
A statutory instrument is a legislative tool that allows the provisions of an Act of Parliament to be enforced or changed without resorting to passing a new Act altogether. An Act is usually a broad set of directives with its provisions detailing the implementation of the Act.
Past Attempts at increasing High Court Fees
2015 – Criminal Courts Charge
The Ministry of Justice has tried to increase high court fees many times in the past few years. One such attempt was the Criminal Courts Charge which the former justice secretary Chris Grayling had attempted to enforce in 2015.
Since April 2015, criminals who had been convicted in England and Wales, were charged from £150 to £1,200. The charge was paid in addition to fines, compensation orders and legal charges which were to be borne by the defendant himself. Those individuals who were convicted after pleading not guilty had to pay a higher cost. The charge was scrapped from December 24, 2015 by Michael Gove who was the Secretary of Justice at that time.
2016 – Fees for Immigration Tribunals
In a more recent attempt to increase the revenue of the courts and tribunals in 2016, the Ministry of Justice had proposed an increase in the fees of the Immigration Tribunal by over 500%. The fees for applying to the tribunal had increased from £80 to £490. The fees for an oral hearing had increased from £140 to £800. These were discarded after massive opposition in consultation with the public. However ministers still remain of the opinion that those who could afford to use the courts should pay more.
Interestingly, the increase in the fees was introduced by the former Secretary of Justice, Michael Gove. Gove had cancelled many of the measures that Justice Secretaries before him had introduced. An example of such a measure is the increase in the Criminal Courts Charge, which had been introduced in 2015 by Chris Grayling, who was Justice Secretary back then.
The scheme was the subject of much controversy. The Ministry of Justice had planned to raise an additional projected income of £300 million a year through the probate fees. This would have been accomplished by charging up to £20,000 for large estates.
There is now the possibility that the proposal could be completely discarded. The proposal was authorized by Justice Secretary and Lord Chancellor Liz Truss. However the ministry confirmed that the necessary Statutory Instrument would not be ready prior to the elections. Therefore the decision to implement this would be in the hands of the next government. There is no certainty that this will happen, even if the current government wins the election.
Probate does not apply on all estates. Applications for probate usually come from half of recorded deaths. According to the new proposed structure, the fees would have been nothing for estates whose probate valuation would have been £50,000. It would have been £20,000 for estates whose probate valuation exceeded £2 million. The existing fee structure comprised a flat rate of £215 for every application. The ministry stated that the charges were “fair and proportionate”. It also said that those who were in a position to afford the courts should contribute to a greater extent to their funding.
Opposition to the Proposal
Political sources have hinted that the opposition to the proposal was too great for it to be reintroduced after the election. No decision has been taken yet whether the proposition should be passed, should the Conservatives win.
Source of Income for Ministry of Justice
If the proposition is dropped, another source of revenue could be required by the Ministry of Justice, to substitute for the projected £300 million that would have been acquired.
Compared to the former Justice Secretaries, Liz Truss has been able to successfully acquire new funds from the Treasury. This time however, Ministers of Finance may be reluctant to cover such a massive deficit through central funds.
Criticism by Joint Committee on Statutory Instruments
A joint committee on statutory instruments was of the opinion that Truss might not have the right to introduce the charges at all, using an SI. The Committee comprised a cross party of Members of Parliaments and relevant peers.
The Ministry of Justice is of the opinion that higher probate fees are necessary to fund the Courts and Tribunals Service.
Writer – Jeffrey Avery