Significant Increases to Probate Fees
By Deborah Cable
Significant increases to probate fees are due to take effect in April 2019 although the exact date is still to be confirmed, assuming the proposals are approved by the House of Commons.
Probate fees must be paid up front, before the grant of probate can be issued. The fees are currently £155 for solicitors and £215 for individuals; an amount that can usually be raised without difficulty.
The fees payable under the new structure are set out below, and could be up to £6,000 for the most valuable estates – an amount many people will be unable to easily find.
|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 – £1 million
|£1 million – £1.6 million
|£1.6 million – £2 million
|Above £2 million
The Justice Minister, Lucy Frazer, said that the proposed reforms are essential to provide an effective modern courts and tribunals’ service, and that the revised fees ensure that no estate will pay a fee of more than 0.5% of the value of the estate, with around 80% of estates paying £750 or less. However as you can see from the table it is those in the middle with estates valued at £300,000 who will be paying the highest percentage of fees on their estate at 0.5%, not those at the upper end of the scale.
As part of the reforms, applicants can apply for the grant of representation online solicitor which will provide a simpler and more efficient application process.They will be provided with access to digital support which the Government says is designed to enable people to apply for the grant of representation without the need for a solicitor. However, despite the rather glib assumption that IT is the answer to all life’s (and indeed death’s) problems and without, presumably, legal advice being provided, one imagines that we humble solicitors will still be required in the administration of estates.
Of course, notwithstanding the ‘simpler and more efficient process’ funding the application may prove to be a real issue.
The burden for paying the probate court fee falls primarily on the executors along with the payment of any inheritance tax and funeral expenses. If the estate has insufficient cash available to pay for these before the grant of representation has been issued, then the executors may have to pay for these themselves. In estates with little cash, but a high value property (i.e. a significant proportion of estates), the executors may be forced to pay the several thousand pounds court fee themselves and will only be reimbursed when the property is sold, which can be several months later. This has the potential to make naming someone as executor in your Will something of a poisoned chalice!
The alternative could be obtaining loans to cover the cost, as currently possible to pay Inheritance Tax. The Ministry of Justice has said it will publish “guidance on ways to pay” which we await with interest. Perhaps it will even be published before the increased fees are implemented ….
This fee increase has been dubbed by a House of Lords committee as ‘stealth tax’. Given that the value of assets does not necessarily mean that any more work is involved in the application, particularly for the court issuing the grant of representation, this new fee structure appears no more than an additional tax levied on estates. Their report published in November 2018 said, “To charge a fee so far above the actual cost of the service arguably amounts to a “stealth tax” and, therefore, a misuse of the fee-levying power.” They also highlight standard guidance given to Government departments which advises that that “different groups of customers should not be charged different amounts for a service costing the same.”
The Law Society adds, “It is unfair and discriminatory to expect the bereaved to subsidise other parts of the courts and tribunal services.”