Tax

Death Tax Plan Shelved As Parliament Runs Out Of Time

Unpopular plans to increase the cost of probate on a dead person’s estate have been shelved by the government.

Justice Secretary Liz Truss pulled the plug on the proposals due to a shortage of time to complete business in Parliament before the snap General Election on June 8.

The fee increase was first mooted in February and due to start from May.

The current flat rate fee of £215 for executors or £155 for solicitors was due to be axed in favour of a tiered charge based on the value of an estate.

Estates valued at less than £5,000 would pay no fee, but those on estates worth 350,000 or more would increase – an estate of more than £1 million would pay at least £8,000 but no more than £20,000.

Controversial move

The measure is now off the table, but any new government could reintroduce the legislation.

The probate fee increase was expected to raise £300 million a year.

The plan had sparked controversy when the government tried to bring in the increases without putting the proposal before MPs.

Many argued that probate costs were taxation rather than administrative charges. MPs complained tax measures could only be introduced by Act of Parliament and not by ministers.

Probate is the term describing how a dead person’s estate is wound up.

Although many small estates do not need probate, the executors of a will must ask the Probate Office for formal recognition they are distributing a dead person’s assets, such as cash, investments and property.

What is probate?

Banks, building societies and other financial institutions will ask the executors for proof the former owner has died and that they have permission to manage any assets left in the estate.

The government charges a probate fee, which the Justice Secretary argues offsets the £1.9 billion a year bill for running courts, tribunals and other justice services, like probate.

Other fees raise around £700 million, leaving a £1.2 billion black hole which the probate increase was planned to partly fill.

Requesting a grant of probate must be made before the estate is wound up, which means some families would face expensive and unexpected fees under the new rules that they could not cover without borrowing.

Around 750 out of more than 820 responses to a consultation about raising the fees objected to the plan.

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