Rising Probate Fees - Just Another Tax?

Rising Probate Fees - Just Another Tax?

06 March 2019 Chris England

Update April 2019:

The changes to the probate fee system that we discuss below were due to be introduced on 1 April 2019 but the implementation has been delayed. The Ministry of Justice has said that the delay is due to preoccupation with other parliamentary business and will now be debated in the House of Commons. 

Rising Probate Fees - Just another Tax?

Back in March 2017, the Government proposed a controversial new probate application fee structure which thankfully, was quickly shelved with the impending general election scheduled for June that year. Unfortunately, with Brexit occupying the political headlines, the plans that have received widespread condemnation from industry professionals have been resurrected and are set for implementation in April 2019.

At present, upon submission of an application for probate, a flat fee is payable of £215 or £155, if the application is made through a solicitor. Under the new rules, a sliding scale will be utilised whereby the fee payable is linked to the size of the estate.  The new charges are set as follows:

  • Up to £50,000: no charge
  • £50,000- £300,000: £250
  • £300,000- £500,000: £750
  • £500,000 to £1m: £2,500
  • £1m to £1.6m: £4,000
  • £1.6m- £2m: £5,000
  • Above £2m: £6,000

These changes have been justified on the grounds of necessity to provide an effective moderns courts and tribunals service, with all income being invested back into the courts. The Government has been quick to highlight that under the new rules, an estimated 25,000 small estates per year will not pay any fee at all. However, all estates over £50,000 will see an increase in fees with higher value estates being hit the hardest. Estates valued between £500,000 and £1million face a fee increase of £2,285 with those valued £2million or more seeing a rise of £5,785. Such substantial increases have attracted disapproval with the common consensus being that it is simply a “stealth tax”. Those with large estates will not only have to consider their liability to inheritance tax but also their exposure to this new fee scale. Generally speaking, it is no more expensive for the Probate courts to process an application for a large estate than any other. It is easy to see why these proposals are being labelled as a “tax” especially when the fees are so far above the actual cost of the service provided.

Going through a bereavement is always a difficult time for any family and now due to substantially increased fees, those same families will find themselves with an additional burden of deciding how to fund the probate fee. If an estate has little cash but valuable property, executors could find themselves having to pay thousands of pounds upfront only to be reimbursed once the property is sold, which could be several months later.

There are concerns that in an effort to reduce the size of their estates on death, thus incurring a lower fee, individuals may turn to lifetime gifting or rely on the rules of survivorship and without the appropriate specialist advice, may end up leaving themselves financially vulnerable. Alternatively, in an effort to save costs, executors and administrators will attempt to administer estates without professional assistance which could create issues further down the line.

Despite criticism from the legal profession and consumers alike, these fee increases look set to come into force. In light of this, if you feel that you would benefit from estate planning advice or require assistance in dealing with the administration of an estate, our Private Client team are always on hand to help and would welcome your enquiry.