The government has confirmed drastic increases to probate fees despite vast dissent.
Eradicated fixed fee
Personal representatives are required to obtain a grant of probate (or letters of administration if the deceased did not have a will) to administer an estate. The Probate Registry charges £155 to apply for a grant if a solicitor applies or £215 when you apply yourself, unless an estate is worth less than £5,000 or entails a spousal or charity exemption. The new system rids the fixed fee and introduces fees based on estate value. New fees will apply to applications made on or after the date of introduction.
| Value of estate (before inheritance tax) | Proportion of all estates in England and Wales | Proposed Fee |
| Up to £50,000 or exempt from requiring a grant of probate | 57% | £0 |
| Exceeds £50,000 but does not exceed £300,000 | 27% | £300 |
| Exceeds £300,000 but does not exceed £500,000 | 10% | £1,000 |
| Exceeds £500,000 but does not exceed £1m | 5% | £4,000 |
| Exceeds £1m but does not exceed £1.6m | 1% | £8,000 |
| Exceeds £1.6m but does not exceed £2m | 0.2% | £12,000 |
| Above £2m | 0.4% | £20,000 |
Whilst the new fee structure exempts smaller estates from paying anything at all (from £5,000 to £50,000), larger estates could be paying up to £19,845 more in May than they would have in April.
Why?
The government says that the new system will raise an additional £250 million a year, which will remedy the current deficit of Her Majesty’s Court and Tribunal System (HMCTS) and will ease the burden on the tax payer. The government argues that courts and tribunals are vital in an effective and functioning democracy, providing access to justice and upholding the rule of law.
Concerns
Most of the 853 consultation responses, comprising legal practitioners, charities and the public, disagreed with the proposals. Dissenters were concerned about the disproportion of fees to estate value and the administrative character of the work of HMCTS. The government assures that no more than 1% of an estate’s value will be payable in fees, however this is before inheritance tax. It was contended that it contradicts taxation laws, as estates not liable for inheritance tax can be liable for these fees. Others emphasised the stark difference between each band, with band 3 and 4 differing by a staggering £3,000. Lastly, some drew attention to the unfairness on estates that are rich in assets as opposed to cash. Nevertheless, changes are due to take place in May, subject to parliamentary consent.
Not all doom and gloom
Thankfully, most banks and building societies have policies whereby personal representatives can use funds held in a deceased’s accounts to meet costs including probate fees. Therefore, meaning personal representatives are not expected to dip into their own pockets. Whilst the Help with Fees scheme will no longer apply to grants of probate, it will still be possible to apply to the Lord Chancellor to grant remission in exceptional circumstances where paying the fee would cause “undue financial or other hardship”.
What can you do?
Parliament are yet to approve the government’s decision, so you can take action by signing a petition at https://petition.parliament.uk/petitions/188175 today! Lastly, there is still time to apply for grants of probate before the changes are due to place in May 2017 and we are more than happy to assist. We can also help you with lifetime planning in order to circumvent such fees when the time arises. For more information, contact our Private Client Team.
Disclaimer: information on our website is published for general information only and represents our opinion on matters at the date of publication. It does not constitute legal advice and must not be treated as a substitute for it. For legal advice, contact us on 01425 471 424.
