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Proposed changes to probate fees could cost charities millions

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Proposed changes to probate fees could cost charities millions

The proposed changes to probate fees announced this week could cost charities £10 million in reduced income, the Institute of Legacy Management has said.

On 5 November, the Parliamentary Under Secretary of State for Justice Lucy Frazer lay before Parliament new legislation to implement a new, banded structure of fees instead of the current flat fee. Under the proposal fees have been revised to rise to up to 0.5% of the value of the estate. The estate value threshold would rise from £5,000 to £50,000, while for those who do pay, Frazer said that around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.

She also stated:

“This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system. We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it.”

However, the announcement was met with concern by the Institute of Legacy Management and Remember A Charity among others, who believe the changes could impact heavily on charities by reducing the income they receive from .

Matthew Lagden, CEO of the Institute of Legacy Management commented:

“The Institute of Legacy Management is deeply concerned by the proposed rise in Probate fees from a flat rate of £215 (£155 if the grant is obtained by a solicitor) to a maximum of £6,000. We welcome the drive to improve the operation of the Court Service and understand the need to balance the interests of taxpayers and Court Service users.

“However, the new fees would significantly reduce income for charities reliant on legacy gifts, to the tune of £10 million a year, at a time when many charities are struggling to meet increasing demand for their services.

“The Government’s own impact assessment acknowledges that the current fees cover the average costs of making a grant of probate, so we are clear that this is a stealth tax, which will be borne in part by charities.

He also asked that consideration be given to introducing a rebate or exemption from the increased fees for charitable estates, which he said would cost the Government relatively little, and would improve the attractiveness of this form of giving.

Director of Remember A Charity, Rob Cope, also commented, saying:

“The new probate structure will see charitable wills costing – in some cases – thousands of pounds more than they do currently and our concern is that this could deter people from leaving a donation in their will.

“While Government expects to generate £185 million from the increased charges by 2022-2023, it is important to remember that charitable bequests are worth almost £3 billion a year for good causes. The sector cannot afford to risk losing legacy income.

“We will be urging Government to offer a reduction in probate fees for estates that include a charitable gift, helping to mitigate the impact of the fee increase.”

Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via www.thepurplepim.com.

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