UK govt drops plans to introduce 'death tax'

Frank Prenesti WebFG News | 21 Apr, 2017 11:25 - Updated: 11:52 | | |


The government on Friday shelved a controversial plan to introduce what critics had called a stealth tax on death in a move that will cost the Treasury £300m.

The proposed increase in probate fees - charges levied on the distribution of an estate after someone dies – would have lifted some costs to £20,000. The government said the extra raid on taxpayers was necessary to fund the courts system.

With the snap General Election only seven weeks away, the Ministry of Justice said it could not get the necessary legislation through parliament in time.

The plans had attracted scorn from MPs and legal profession. A cross-party parliamentary committee suggested the MoJ had exceeded its legal powers.

In trying to avoid claims of introducing a “death tax” the MoJ was going to introduce the law by calling it a “fee” and using a Statutory Instrument (SI), which would mean that the measure did not need parliamentary scrutiny. The committee said the plan would “make an unexpected use" of the power attached to SIs.

The fee changes had also been opposed heavily during the public consultation process with only 13 out of 831 respondents agreeing with the proposals.

Under the new fee system, estates valued at up to £50,000 would pay nothing, with tiered increases up to £20,000 for estates worth more than £2m. They would have replaced a previous flat rate of £215 if an application was made by an individual or £155 if from a lawyer.

A Freedom of Information request tabled by mutual insurer Royal London in April found that the MoJ did not actually know what the costs of handling a probate application were.

The company accused the ministry of treating bereaved families as a "nice little earner". The request also asked for the cost of handling applications broken down by the size of the estate.

In the reply, the MoJ said not only did it not have this information but that it had 'no business or managerial' reason to have it.

Former pensions minister and now Royal London's director of policy Steve Webb said the plans were "clear evidence that the new charging structures are nothing to do with recovering the reasonable cost of processing probate applications and are simply a backdoor way of raising money from people in their time of greatest need".

"It is one thing to make a reasonable charge for the provision of a public service. But the Ministry of Justice has now admitted it does not know the unit cost of handling a probate application and sees no reason to find out what it is," said.

More news

21:54 Friday preview: EU council summit conclusion, SThree and Trinity Mirror updates

The conclusion of the EU Council summit will be the main focus for markets on Friday, with no FTSE 350 companies expected to report results.

21:23 Walt Disney to buy 21st Century Fox assets in $52.4bn deal, including Sky stake

Walt Disney has announced an agreement to buy the entertainment assets of 21st Century Fox in a deal worth around $52.4bn, including a 39% stake in UK broadcaster Sky.

21:20 Scotland introduces income tax raise for top earners

The Scottish government has announced it will increase the tax paid by the country’s highest earners, as it bids to raise extra money to fund wage increases in the public sector.

20:37 Europe close: Stocks slip as traders mull ECB's next move

Stocks finished lower, tracking a weak start to trading on Wall Street and on the back of a mixed batch of economic data out of China overnight and a tweak in monetary policy by the People's Bank of China - a timely reminder perhaps of the potential ripple effects of US policy decisions and vice-versa.

18:01 London close: Footsie lower as traders test Sterling upside

London stocks finished lower on Thursday as the Bank of England stood pat on monetary policy, as widely expected, but amid dovishness across the Pond and on the other side of the Channel which resulted in a stronger Sterling.

13:18 BoE expects gradual and limited policy tightening over medium-term

The Bank of England kept policy on hold by a unanimous vote as had been widely-anticipated given previous guidance for a very gradual pace of tightening over the medium-term.

13:13 China tweaks lending rates after Fed decision

China's central bank tweaked two of its policy rates in what some analysts said was a bid to relieve pressure on the country's currency.

13:04 Google trends reveal the most searched terms of 2017

Bitcoin, the increasingly popular cryptocurrency has dominated Google’s top searches this year.

13:16 ECB keeps all rates unchanged, confirms guidance on asset purchases

The European Central Bank has opted to keep all its main policy rates unchanged, with policy-makers reiterating that they expect to keep all their key rates as they are until well past the end of the ECB's net asset purchase programme.

12:53 Zotefoams investing £12m in Croydon facility

Cellular materials technology company Zotefoams announced that it will invest approximately £12m to increase capacity at its Croydon site.