Intestacy threshold increase

How the intestacy fixed sum for surviving spouses and civil partners in England and Wales has been belatedly increased to £322,000.

In July, the Government passed a statutory instrument (SI 2023/758) which increased the fixed sum for surviving spouses and civil partners payable under the intestacy regime in England and Wales. The sum increased from £270,000 to £322,000 with effect from 26 July 2023, a 19.3% increase.

This is the net sum that a surviving spouse or civil partner is entitled to receive if a person dies intestate leaving “issue”. Generally speaking, the term “issue” is used instead of “children”, but “issue” has a wider meaning and includes the lineal descendants, i.e. children, grandchildren, etc.

The change seems to have flown under many people’s radars, not least because the Ministry of Justice (MoJ) chose not to issue any press release. Dig a little and an interesting story emerges which explains – but does not justify – the MoJ’s reticence:

  • Schedule 1A of the Administration of Estates Act 1925 requires the level of the fixed sum to be increased in line with the rise in the CPI:
  • every five years (as last happened in February 2020); or, if earlier,
  • when the CPI has risen by over 15% since the previous increase.
  • The 2020 increase was based on November 2019 CPI and the 15% threshold was triggered by the October 2022 CPI, which was published on 16 November.
  • Paragraph 4 of Schedule 1A says the Lord Chancellor must make an increase Order to raise the fixed amount within 21 days of the 15% threshold being crossed.
  • However, the relevant Order was not set before parliament until 5 July 2023, 231 days after the CPI was announced.
  • It appears that the £322,000 figure was based on the March 2023 CPI, issued on 19 April. The latest CPI (for June) would have yielded a figure £6,000 higher.
  • The Explanatory Memorandum to SI 2023/758 gives no clue to the seven-month delay, merely referencing the 15% threshold as a reason for its issue.
  • The cross-party House of Lords Secondary Legislation Scrutiny Committee picked up the MoJ’s ‘inexcusable error in timing of the Order’ and the ‘deficient Explanatory Memorandum’ in its recent report on the 2022/23 legislative session. It noted that the ‘MoJ has breached the law requiring it to increase the fixed net sum within the 21-day timeframe’. This may explain the absence of any MoJ press release…

The overdue increase in the intestacy fixed sum serves as another reminder of the impact of the freeze of the nil rate band, something else the Government would probably not wish to highlight. Had the nil rate band been index-linked since its April 2009 freeze began, it would now be around £475,000.

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