The extra death duty - which was set to come into force next year - could have cost the largest estates £6,000
The government has decided to scrap the controversial probate fee hike introduced by Theresa May.
Probate fees were set to go up next year, potentially hitting 300,000 bereaved families a year.
Under the new system the charge would have gone up according to the value of the estate.
The changes would have seen the flat fee of £215 a year go up to £6,000 for the largest estates - raising around £155 million a year for the government.
The government will now review probate fees as part of the annual assessment of the fees charged for proceedings in the civil and family courts.
A Ministry of Justice spokesperson says: “Fees are necessary to properly fund our world-leading courts system, but we have listened carefully to concerns around changes to those charged for probate and will look at them again as part of a wider review to make sure all fees are fair and proportionate.”
Jon Greer, head of retirement policy at Quilter, says: “A hike in probate fees has been on the cards for numerous months now, but just this weekend the justice secretary scrapped the controversial plan.
“The dispute was primarily because the tiered charge structure resembled a tax, rather than a fee.
"Even the Office for National Statistics said that it expected to treat the charges as a tax in its evaluation of the UK’s finances. Scrapping the hike in favour of a review was an easy win that was hard to miss.”
Probate fees give legal control to the family over the estate of someone when they pass away.
Currently a flat fee of £215 applies in England and Wales - or £155 if you use a solicitor – on estates above £5,000.
Critics argued that the hike was a backdoor stealth tax that would hurt grieving families.
Under the original plan, the threshold for paying fees was set to be lifted to £50,000, exempting 25,000 estates annually from fees.
Estates valued between £50,000 to £300,000 would be charged £250, going up to a maximum £6,000 for estates more than £2 million.
Kay Ingram, director of public policy at LEBC, says: “I am delighted as we campaigned against this increase which looked more like a tax than a fee.
"We understand the courts have to be paid for but lumping that cost on bereaved families was an unfair burden and we are pleased that the government have listened.”
It's not as if they don't collect enough from IHT already. Getting Grant of Probate is a big enough hassle as it is and at a time when you are least of a mind to face the rigours and costs of legislative 'Red Tape'.
Stealth taxing of Probate
If the government approached the problem of directing revenue from the intended tax towards paying for our Justice System fairly then they should earnestly look at the incomes and pensions of judges. . They are obscenely high and need to be adjusted to a sensible level reflecting the hours, rate of remuneration and the ott pensions offered. The last time their lucrative pension pots was looked into, these snouts threatened to withdraw their services and the government caved in!
Why is it always assumed that the bereaved have plenty of money. If a wife or husband left their estate to their partner, their would be no tax to pay except the probate tax, which it is. That might only be a house and not a lot of cash, we don’t all have private pensions. Care home fees, and having to sell your property or put your business in jeopardy, now district valuers are querying property prices particularly agriculture. It’s different when the property is sold but when it isn’t it’s just a paper figure. Why can’t we be like Australia, where they don’t pay inheritance tax. If you had money and you give some away to your family and friends outside of birthdays and Christmas why do you have to live seven years if later your estate became liable for iht. Is it not your money, when does it become their money, even before you die. I never understood why the accountant always asked had you given away more than £3000 a year, I know why now, but being on a family farm and not being paid much more than that at the time to live on despite doing 80 hours plus a week, it seemed a stupid question, but hours like this are normal for a dairy farmer, and the British public prefer to drink soya milk, what has that destroyed in its production,
julian hodge are holding £15000. my late wife had £30.000 account with them they transferred £15,000 to my Halifax account. the other £15,000 they say I have to go to probate. the limit is £5000. that limit was going to be raised in the last budget, is there any sign of that happening or another way round the problem.
I'm no expert but isn't there something wrong here, generally a wife's assets on her death should transfer to her surviving husband (provided there is one) without penalty of probate or IHT (& vice versa). Unless there were some other specific wishes in the deceased's Will/'Letter of Wishes' to provide part/all assets elsewhere but again that shouldn't affect the surviving spouse position as a beneficiary.
It will come back - too easy…
It will come back - too easy for the Tories to milk this cash cow!
If Labour got in they would be the ones milking it, not the Tories. Labour plan to replace the IHT allowance with a £125,000 Lifetime allowance. Anything above £125,000 would be taxed at normal Income tax resulting in tax bills running into thousands for many people, even those with modest homes. Still, I suppose Corbyn has to find the money for his Pie in the Sky spending plans from somewhere.