Charitable organisations have urged the government to reconsider controversial proposals to increase some probate fees so that estates including bequests to charities are not adversely affected.
In an open letter to justice minister Lucy Frazer QC, the Institute of Fundraising, Remember A Charity, the Institute of Legacy Management and the National Council for Voluntary Organisations warn that the proposed new fee structure has ‘unintended consequences that could be detrimental to charitable giving’.
The government’s proposals would see the cost of administering probate reflect the value of the estate, replacing a flat fee. For the wealthiest estates, this would mean a rise from £155 to £6,000. But people with estates worth less than £50,000 will not pay any fees - at present this exemption is only for people with estates worth £5,000 or less. The Law Society has described the proposals as ‘a misuse of the lord chancellor’s fee-levying powers’.
The joint letter suggests that a ‘reduction or discounted rate’ on estates that include a legacy gift would reduce the financial impact on charities and create an incentive to leave a charitable gift.
According to the letter, legacy income could grow by 2.7% a year until 2022. However, the organisations warn that the changes ‘will severely disrupt a promising lifeline for good causes.
‘We appreciate clarification that the order will not affect the amount paid out to charities when there is a fixed request rather than a percentage. However residual bequests account for 87% of total legacy income and are the main type of legacy income received by charities,’ it adds.
The organisations have also urged Frazer to meet them to try and identify a way forward.
The Non-Contentious Probate (Fees) Order, introduced via statutory instrument (SI), is to be laid before the House of Commons before April. Usually, unless there is a formal objection, an SI would pass. However, with an objection lodged it would give the house the chance to vote on the proposals. The Gazette understands the Labour party plans to oppose the order.