Last year, HM Courts and Tribunals Service proposed a massive increase to the fees charged to obtain probate. This would have seen the charges for the most valuable estates increase to £20,000. Currently, the fees are fixed at £155 for Solicitor applications and £215 for personal applicants.
The plans were dropped ahead of the 2017 general election, but the government has now resurrected the proposals, due to take effect from April 2019, with a sliding scale based on the value of the estate to replace the current flat rates.
The new fees have been moderated, but the top level of fees payable will still be £6,000, whilst fees for an average estate are increased to around £750. This is estimated to result in 90% of estates paying a higher fee.
The good news is that for estates with a value up to £50,000 where probate is needed, no fee will be payable. This exemption is currently only available for estates of up to £5,000 and the new scale is estimated to lift 25,000 estates out of the scope of the fees each year.
|Value of estate (before inheritance tax)||Proposed fee|
|Up to £50,000 or exempt from requiring a grant of probate||£0|
|£50,000 – £300,000||£250|
|£300,000 – £500,000||£750|
|£500,000 – £1m||£2,500|
|£1m – £1.6m||£4,000|
|£1.6m – £2m||£5,000|
Many believe, including the Law Society, that these proposals represent a stealth tax on dying. There are already several bodies campaigning against the proposals on the basis that they are unlawful, as they should be introduced by an Act of Parliament following debate in the House of Commons, rather than being slipped in the back door by Statutory Instrument.
Law Society President, Christina Blacklaws, is quoted as saying, ‘The last time the government proposed a change in fees, there was widespread condemnation from both the legal profession and consumers. To make it worse, the government is proposing to avoid the scrutiny of parliament by introducing the changes via statutory instrument. They can call it a service charge or a graduated fee, but what it amounts to is an additional inheritance tax.”
Laying the revised legislation before Parliament, the Ministry of Justice stressed that all the money raised from the new fees will be spent on running the courts and tribunals service. This will amount to an estimated £145m a year from 2019/20 and £185m in 2022/23. Last year’s proposals were expected to raise £250m per year.
The MoJ’s press release stated: “We have listened closely to concerns around early proposals. Fees will never be more than 0.5% of the estate’s value, and are recoverable from the estate. Fees will be set at a level to ensure that they will only be paid by those who can afford them, with all income going directly to our courts and tribunals – ensuring justice is done, and protecting victims and vulnerable people.”
The MoJ also said it will publish a guidance document before the Statutory Instrument comes into force.
There is general agreement amongst the legal profession and the general public that this is nothing more than a stealth tax. It is unjustifiable as the probate process is the same for each estate. No additional work or resources is required for higher value estates, the administrative procedures are the same regardless of value.
What do you need to do?
If you are already administering the estate of someone who has died but have not yet applied for probate, then get your application into the Probate Registry before the rules change.
It is best to take legal advice, however, because if you rush to beat the probate court fees increases, you may make mistakes when completing the Inheritance Tax forms. That could lead to HMRC imposing penalties for inaccuracies, which could be much higher than the probate court fees being avoided.
The fee is based on the value of assets owned by the deceased at the date of death. This means that any assets given away in the individual’s lifetime will be unaffected. In addition, where the individual owned assets jointly with someone else, then the grant of probate will not take into account any of those assets which pass automatically to the surviving co-owner.
You do need to be very careful, however, in giving away or sharing assets so professional advice should be taken if you are considering making lifetime gifts.
At the moment, it is unclear how executors will pay the new probate fees. There also remains a lot of unanswered questions around how the money will recovered from the estate, as assets are frozen until the executors obtain the grant of probate.
There will be older and vulnerable people with estates or properties that have grown in value over their lifetime, which makes the proposals seem particularly unfair. Not every probate application is simple, so it is highly recommended that specialist legal help is sought at this distressing time.