Probate fee hike 'a nice little earner' for MoJ
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Government urged to think again as it admits it has no information on cost of probate
The Ministry of Justice is treating bereaved families as ‘a nice little earner’, according to a mutual insurance firm, as pressure grows on the government to reverse its controversial increase in probate fees set to be introduced next month.
At present, grants of probate incur a £155 flat fee if the process is handled by a solicitor and £215 when the application is made directly by the executor. Estates where probate is required but which are worth less than £5,000 currently attract no fee.
However, as previously reported by Solicitors Journal, under the MoJ’s reformed proposals, estates worth under £50,000 would attract no fee, but beyond this the fee would increase on a sliding scale ranging from £300 to a maximum of £20,000. The new fees will apply from 1 May.
In response to the fee reforms, Royal London sent a freedom of information request to the ministry asking for the average cost of handling a probate application. The life insurance, pensions, and investment firm also asked for the cost of handling applications broken down by the size of the estate.
In reply, the MoJ said it did not have the information sought, nor did it believe it any ‘business or managerial’ reason to have such information.
Steve Webb, director of policy at Royal London, said the ministry’s admission that the new rates were a simple revenue raising measure was not fair on bereaved families who the government would be treating as ‘a nice little earner’.
‘It is one thing to make a reasonable charge for the provision of a public service. But the MoJ has now admitted it does not know the unit cost of handling a probate application and sees no reason to find out what it is,’ remarked Webb.
‘This is clear evidence that the new charging structures are nothing to do with recovering the reasonable cost of processing probate applications and are simply a backdoor way of raising money from people in their time of greatest need. The government should think again before going ahead with this tax hike on bereaved families.’
In a letter to the House of Commons justice select committee in February 2016, Shailesh Vara MP admitted that while court fees were unpopular they were necessary to make ‘a significant contribution to reducing the deficit and enabling investment which will transform the courts and tribunals service’.
The then justice minister cited a £1.1bn funding gap in the MoJ’s budget as the primary reason for the probate fee hike. ‘These proposals are progressive, with lower value estates lifted out of paying any fee at all and other estates only paying more as the value of estate increases.’
While the ministry expects to raise an extra £250m from the fee increase, a parliamentary report published last week has cast doubt on the Lord Chancellor’s legal authority to introduce the new charges which have been likened to a back door inheritance tax.
Section 92 of the Courts Act 2003 and section 180 of the Antisocial Behaviour, Crime and Policing Act 2014 state that before setting a fee the Lord Chancellor must have regard to the financial position of the courts, including any costs incurred by the courts not being met by current fee income and the competitiveness of the legal services market.
The MoJ said it has no plans to change its fee reforms which will be considered by parliament after Easter.
Chris Partington, head of private client at Slater Heelis and a member of Solicitors for the Elderly, told this journal he hoped the committee report will lead to a fairer system of probate costs.
‘At the moment, however, things are very much up in the air,’ he said. ‘Without knowing what will happen, solicitors and executors would be wise to work on the basis that increases will be coming soon.’
John van der Luit-Drummond is deputy editor of Solicitors Journal