Family Businesses To Be Hit By Probate Fee Hike
The Institute for Family Business (IFB) has warned that family businesses may be impacted by the government’s proposed increases to probate fees.
IFB External Affairs and Policy Director Fiona Graham said: “We, along with legal experts, have raised serious concerns about the Government’s proposed changes to the probate system.
“This new system presumes estates will have immediate access to significant amounts of cash. That flawed assumption could drive bereaved families into making decisions about the future ownership of a business their family may have owned for generations, solely in order to meet a short term need for cash to pay the fee. This would be to the detriment of the family, their employees and community.
“A farming business which may be land rich but have little access to cash, for example, would struggle to pay the fees. As would an entrepreneur who had spent years building a business and reinvesting all the profits to fund future growth.
“This new system will have a significant emotional and financial impact on family businesses, and we urge the Government to reconsider this move.”
Industry commentators have argued that families may well be forced to look at alternative sources of finance in order to pay for the new fees. These may include loans, insurance policies or more specialist vehicles developed specifically in order to meet the need that is expected to develop should the decision be fully implemented.
The government last week introduced a new Statutory Instrument, with a new fee structure.
|Estate Value||New Fee|
|Up to £5,000||£0|
|£5,000 – £50,000||£0|
|£50,001 – £300,000||£250|
|£300,001 – £500,000||£750|
|£500,001 – £1m||£2,500|
|£1m – £1.6m||£4,000|
|£1.6m – £2m||£5,000|
The government has introduced revised proposals for a hike in the fees associated with granting probate, as it pushes ahead with a move to a tiered system.
The government originally consulted on a new probate system in 2016, and received overwhelming criticism by legal experts, consumer representatives and the IFB. The 2016 plans included a top fee of £20,000 for estates over £2 million.
In April 2017 the proposals were withdrawn and last year the announcement was made to introduce the Statutory Instrument to bring the change into force after the Joint Statutory Instrument Committee declared the new fee was a tax, not a fee, and therefore may not be intra vires.