UK govt drops plans to introduce 'death tax'

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

contract-945619_1920

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

16 Oct US close: Stocks finish higher on impressive factory data

Stocks started the week higher on Monday, on the back of a stronger-than-expected reading on the Empire State factory index and amid somewhat hawkish Fedpseak.

16 Oct Europe close: Political standoff weighs on Spanish stocks

Stocks on the Continent were little changed at the start of the week, save in Spain where the ongoing political standoff between the central government in Madrid and regional officials in Catalonia weighed on sentiment.

16 Oct Mercedes-Benz to recall almost 400,000 vehicles over faulty airbags

German multinational automotive group Daimler, the parent company of Mercedes-Benz, announced on Monday that they would recall nearly 400,000 vehicles that were potentially fitted with a faulty airbag.

16 Oct London close: Stocks slip lower despite gains for miners

London stocks slipped on Monday as miners rallied on the back of Chinese inflation data, but Convatec slid after a profit warning.

16 Oct Airbus chief willing to step down if 'no longer part of the solution'

Tom Enders, chief executive of French aeronautical giant Airbus, said on Sunday that he would be willing to step down from the role he had held since 2012 in an effort to safely guide the firm through ongoing corruption investigations.

16 Oct US open: Stocks push higher following upbeat factory data

Stocks have started the week higher on the back of a stronger-than-expected reading on the Empire State factory index and amid somewhat hawkish Fedpseak.

16 Oct Telit confirms talks to offload automotive division

AIM-quoted machine-to-machine (M2M) communications provider Telit Communications confirmed it was in "very early stage" talks to sell its automotive division.

16 Oct Tuesday preview: UK inflation could top 3pc; results from Pearson, Merlin, Asos

UK and eurozone inflation will be the big focus of the day, while the new reporting season kicks in with Asos, Bellway, London Stocks Exchange, Merlin Entertainment, Pearson and Virgin Money.

16 Oct Stellar Diamonds agrees sale price for Guinea assets

West Africa-focussed diamond development company Stellar Diamonds announced on Monday that it has signed conditional share purchase agreements with Gold Knight - a wholly-owned subsidiary company of BDG Capital - in relation to the proposed sale of Stellar's assets in the Republic of Guinea, as it had previously announced on 5 June and 14 August.

16 Oct Genedrive signs distribution agreement with Sysmex

Near-patient molecular diagnostics company Genedrive announced on Monday that it has signed a distribution agreement with Sysmex Europe, a subsidiary of Sysmex Corporation, for the Genedrive HCV ID Kit and Genedrive platform in the Europe-Middle East-Africa region, with an initial focus on Africa.