Row over 2,700% hike to probate fees reignites as it's labeled a tax in Spring Statement

Probate ‘fees’ for bereaved families are to be classed as a tax, sparking fresh outrage over a massive hike of up to £6,000 and renewed calls for full scrutiny by Parliament.

The Government was accused of sneaking through the stealth ‘death tax’ last month by getting it waved through by calling it a fee and thereby avoiding a debate or vote.

But it has now emerged the Treasury expects the newly hiked fees to be officially classified as a ‘tax on capital’, rather than a payment for a service. 

Changes to fees: System will be based on the size of an estate, replacing fees fixed at £215 for all (Source: Ministry of Justice)

Jane Berney, of influential accountants’ group ICAEW said: ‘ICAEW and many others have consistently said that the increase in the new rates for probate fees, with its 2,700 per cent increase in costs for estates valued over £2million, is indeed a tax. 

‘As such it should be subject to the same degree of scrutiny as any other proposed tax change.’ 

A Ministry of Justice spokesman told This is Money:  ‘This is not a tax – and any decision by the ONS to define it as such would be purely for accounting purposes. 

‘The income raised from probate fees will go towards funding a more efficient and effective courts and tribunals system.’ 

The MoJ has previously said of the new probate charges regime: ‘Our system will see thousands of bereaved families paying no probate fees at all – protecting an additional 25,000 estates each year.

‘Fees are vital to the effective running of our courts and tribunals, ensuring access to justice and protecting vulnerable victims.’

The MoJ announcement of its plans is here. 

The OBR document which accompanied the Spring Statement says: ‘Given the structure of the fees, the Treasury expects the ONS to classify them as a tax on capital rather than a payment for a service.

‘The new fee structure is expected to raise around £155million a year. We have reduced our inheritance tax forecast by around £5million a year to reflect the incentive for individuals with estates worth close to the new probate fee thresholds to reduce the value of their estates to pay a lower fee.

‘This effect is expected to be small, since the inheritance tax liability itself already provides a significant incentive to reduce the value of estates.’