However you want to characterise it, if we are indeed in the post-truth age or the era of “alternative facts” it is likely that it would be, by definition, so confusing a state of affairs that we would be unable to tell. But the sheer brazenness of the government‘s budget announcing a May 1st hike in Grant of Probate “court fee” does feel indicative of a huge disconnect between policy and reality, and as such is couched in suitably misleading language. But make no mistake it is a tax on death that strikes right to the heart of families, their sense of security, their sense of self-worth and their self-reliance. We should not be surprised if ultimately it undermines families, their connection to their land and their legacies.
Currently the probate process is, basically, fair. Probate solicitors have to pay a flat rate of £155 when making probate applications, while personal representatives who manage the process themselves pay a slightly higher £205. But with the new banding fees to be calculated before inheritance tax settlement, estates will soon face bills of thousands of pounds while those worth in excess of £2 million will be saddled with probate fee bills of £20,000.
It is not enough for the government to half-heartedly dress this up as good news. Sure, estates worth less than £50,000 will no longer have to pay anything but this is, for more valuable estates, a 9,302% (yes, you read that correctly) rise in inheritance tax and no matter how much sugar coating the government applies, the pill is simply too big and too bitter to swallow without choking somewhat.
If it is a tax in disguise, the policy’s costume can only be described as shamefully cursory. Indeed the 2017 Policy Briefing states that “the structure of the fees is such that the Treasury expects the ONS to classify them as a tax in the National Accounts”.
Meanwhile the MoJ doesn’t bother to dress it up in any way, equity in family homes (let’s face it the majority of the tax is going to eat into the equity of those family homes which have benefitted from rising house prices) is going to be sacrificed to make up for financial failings in the judicial system. In the words of the MoJ: “These proposals will raise a critical contribution to cutting the deficit and reducing the burden on the taxpayer of running the courts and tribunals”.
It is galling. Death is being seized upon as an opportunity to tax money that has already been taxed in life. As if that weren’t enough, it’s not even the only death tax. No, it’s the second death tax, after inheritance tax. One wonders if, even in the strange times we currently live in, the Tories could win an election platforming on something they could accurately advertise as the “Double Death Tax”. Even in the face of the most unfocused opposition seen in decades it would be a hard sell.
Let’s think for a minute about the practical reality of this taxation. Here’s Joe. He works in the bottle factory. Exhibit one. A photograph. It’s of Joe putting lids on bottles, just as he did seven hours a day for forty-five years. Every month he worked he was taxed on his salary. Then he was taxed on the purchase of his house. Meanwhile he was taxed on everything else he bought. But Joe’s lucky. He lived in a era of relative prosperity – he did National Service but he missed the war. What’s more, the value of his house increased meaningfully over the decades he inhabited it and made full mortgage repayments. By the time he died it was worth £550,000 and this together with savings and other investments/assets of £100,000 meant that his family were liable for £130,000 inheritance tax on his estate. As of May 1st his grieving family will also have to find an additional £4,000 simply to be able to apply for the Grant of Probate. And all this must be stumped up before the family can gain access to the assets bequeathed to them by dear old Joe. True this is eventually recoverable from the estate but unless the banks are able (and willing) to release the additional probate fees from the deceased Joe’s account, things are going to be tough.
In this age there will be a great many families who will struggle to find those funds upfront. Sure, there are many of us who are “property rich”, but to undermine this connection to our land and legacy is to seriously undermine our identity. And property is not always something the value of which is measurable in monetary terms. What of those families who are not cash or asset rich but who have family homes of great personal, familial and sentimental importance? They may not have the means to pay all these fees and liabilities. They will only find it harder to cling on to the homes that define who they are. For them a house is not only an inheritance in the narrow financial sense of the word, it is an inheritance in the fullest sense. A place where generations have born, gathered, died and forged stories together.
The whole thing feels vaguely like a scam. And it is: the proposed cost of fees bear absolutely no relation to the cost of the work involved in applying for a grant of probate. It is of course outrageous to expect the bereaved to financially prop up the Courts and Tribunals Service by way of this stealth tax.
In a written statement to Parliament in February Oliver Heald (Minister of State for Courts and Justice) said that the increases will raise £300 million – although by 2022 this will very likely be £350 million. This figure is confirmed in the Government Response to the consultation on proposals to reform fees for grants of probate; the introduction of which focuses on “the importance of a properly funded courts and tribunals service”.
It is as if suddenly death, estate administration and the concerns of grieving families are no longer the paramount concerns of the probate process, which instead has become a proxy parent of the underfunded judicial system.
This is about finding more ways to harvest from death, something which inevitably conjures images of the Grim Reaper. In the grand scheme of things £300 million may not be much, but with the way it’s being pulled from the hat, it must feel like magic to those who feel they can get away with it. This is the government trying to act the role of the magician, all the while dressed as the undertaker.
In 2015 when the Government proposed to increase the divorce petition fee from £410 to £750, Sir James Munby, President of the Family Division, was equally as condemning of the increase in the cost of divorce petitions:
“There are only two things that the justice system does where you have to use the system. One is divorce, the other is probate … Therefore, we have a captive market … I have to say that there is something rather unattractive – particularly if one is selling justice, which one should not be doing – in battening on to the fact that there is a captive market and that, because there is no elasticity of demand, one can simply go on putting up the fees until it becomes another poll tax on wheels.”
The Justice Select Committee condemned the divorce fee increase as “unjustified”; to date they have been strangely quiet on the grant of probate fee increases, given that they described the divorce fee increase as “approximately double the cost to the courts of providing the service”. Maybe we will soon be hearing from them, but perhaps, like the rest of us, they are suffering from fatigue – a common complaint of those of us living in the midst of this post-factual era.
Sir James Mumby makes a valid point – those seeking a grant of probate are a “captive market”. When you are guaranteed to make money out of death, that means punters a plenty.
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