A new stealth tax on families passing wealth across the generations will start to bite from April 2019.
That’s the date when the cost of probate – permission to control a dead person’s estate – is set to skyrocket.
The current fee to obtain probate is £215 for a family or £155 if the application is made by a lawyer, but nearly 300,000 families will face a bigger bill, while more than 55,000 of them could pay between £2,500 and £6,000.
Estates worth up to £50,000 re exempt from paying a fee – a 1,000% increase over the current fee-free £5,000 limit.
The new fee structure is more expensive because the Ministry of Justice is linking the cost of probate to the size of the estate from April.
How much you could pay
Whitehall reckons the new fee structure will pull in around £185 million a year by 2022-23, while arguing the probate fee will never cost more than 0.5% of the value of an estate and 25,000 families will pay nothing.
One in five families will pay a £2,500 fee on an estate worth £500,000, says the ministry.
According to the latest Office for National Statistics release, which cover 2015-16, 77,100 estates had gross assets totalling £50,000 or less, while 200,000 had more.
The £6,000 top fee would have been paid by 2,250 estates worth £2 million or more.
George Hodgson of the Society of Trust and Estate Practitioners said: “Probate fees were supposed to cover the cost of a service.
No profit allowed
“Now it seems the government wants to turn probate fees into an extra death tax.
“And although the government has reduced the charges, it has not dealt with the fundamental principle of using bereaved families to prop up the legal system.”
The Joint Committee Of Statutory Instruments, a Parliamentary body, warned the ministry that the probate fee should cover the cost of granting permission and not include a profit element.
By law, Parliament must vote to agree a new tax but ministers can sign off a statutory instrument to vary laws.
“Fees will be set at a level to ensure that they will only be paid by those who can afford them, with all income going directly to our courts and tribunals – ensuring justice is done, and protecting victims and vulnerable people,” said Justice Minister Lucy Frazer.