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Press Comment: Parliament committee backs controversial probate fee reforms

07/02/2019

If you are covering the Delegated Legislation Committee’s decision to approve the introduction of an increased tiered probate fee structure by nine votes to eight today, please see the following quote from Rachael Griffin tax and financial planning expert at Quilter:

Rachael GriffinToday the Ministry of Justice came another step closer to introducing their much maligned plan to introduce a vastly inflated tiered probate fee structure, which bears no relation to the actual cost of the process.

Despite the cacophony of condemnation from the press, the legal industry and the charity sector, the Delegated Legislation Committee chose not block the MoJ’s plan to introduce what many have described as a stealth tax. The MoJ want to present the fee as a cost of processing probate cases, but in reality the tiered structure, which penalises larger estates, is much more akin to a tax mechanism. That is a key issue since it means estates are effectively being double-taxed – once for inheritance tax of 40% above the nil rate band and then again through tiered probate fees. Raising additional revenues from personal wealth should be conducted in a transparent way through the tax system, not a back door fee hike.

The close vote which took place today saw those who champion the introduction of the tiered structure win by just one vote. Although the issue could still drag on further, today’s result makes it ever more likely the probate fee hike will get passed.

Although the reform will take some estates out of the probate fee system altogether, larger estates could pay far more than the true cost of administration. We calculate the rules could unfairly force grieving families to pay, in some cases, 28 times more than they currently do.

The good news is that although these changes will add further complexity to estate planning, there are still plenty of steps people can take to plan ahead. Using trusts can help reduce the value of an estate for inheritance tax purposes, meaning a lower charge will apply. People concerned about how beneficiaries will pay the probate fees could leave sufficient funds in a life insurance policy, and provided the policy is written in trust, it can be accessed immediately on death, without the need for probate.

For more information contact

Alex Berry023 8072 626007741 151931alex.berry@quilter.com

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £118.1 billion in customer investments (as at 30 September 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Quilter Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• The private client advisers business is now Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

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This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.