Probate fees to rise to £6K for largest estates
Plans to hike the cost of probate with the introduction of banded fees will see estates valued at over £1m paying £4,000 in fees from April 2019
6 Nov 2018
The new probate fees, due to come into force from April 2019, will see a banded system of probate fees for all estates valued over £50,000. The plans have been given the green light by the government following delays announced at the snap election in June 2017 although the fees have been cut after the initial proposals to charge met with strong opposition.
The new charges will hit larger estates valued at over £1m with a £6,000 bill, although original proposals to charge up to £20,000 for estates worth over £2m has been dropped.
There will also be a cap on fees at no more than 0.5% of the value of the estate. At the same time, the estate value threshold will rise from £5,000 to £50,000, removing around 25,000 estates annually out of fees.
‘For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service,’ parliamentary under secretary of state for justice Lucy Frazer QC MP, told MPs.
Under the new fees, an estimated 280,000 estates will be liable for higher probate fees.
‘This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system,’ said Frazer.
Currently a flat fee of either £155 is payable upon a probate application made by a solicitor or £215 for an application made by an individual. These fees were set in 2014 and raise £45m per year, which recovers the full cost of running the Probate Registry.
The current flat rate system will be replaced with a banded pricing structure linked to the value of the estate (before inheritance tax (IHT)), and the same rate applies regardless of whether the applicant is a solicitor or an individual.
Value of estate (before inheritance tax)
Up to £50,000 or exempt from requiring a grant of probate
£50,000 - £300,000
£300,000 - £500,000
£500,000 - £1m
£1m - £1.6m
£1.6m - £2m
The fees will raise £145m per annum from 2019/20, rising to £185m in 2022/23, and will be ringfenced to fund the courts and tribunal service. In 2016/17, the courts service cost £1.6bn in running costs but recovered less than half of that in fees (£740m).
The Ministry of Justice plans to issue a consultation document before the statutory instrument comes into force, entitled Guidance on ways to pay for probate fees.
The fees are set to come into effect from 1 April 2019.
James Ward, head of private client at Kingsley Napley LLP, said: ‘This will leave many estates struggling to pay the fee up front when assets are tied up in frozen bank accounts or property. Banks will need to allow access to accounts to pay this.
‘My greatest fear is that this “tax” will push people away from using Wills as the means for leaving assets on death. In order to reduce their estates before death, individuals may turn to gifting during their lifetime which could leave them financially vulnerable or use the survivorship rules of joint property and bank accounts.
‘The survivorship rules see property automatically passed on death rather than via the Will and therefore the value is not included in the value of the estate at the grant application stage.
‘It is very effective in some cases but can lead to inequality between children and a misunderstanding as to who gets what and not fulfil the deceased’s wishes.’
Report by Sara White