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Probate fees set to increase to up to £20,000

James Watkins - Law on the Web

  1. 24 February 2016
  2. Wills and Probate
  3. 0 comments
Time Will

The cost of inheriting is set to increase, thanks to a new government proposal to raise probate fees in line with the value of an estate.

As a result, the cost of carrying out probate on a deceased individual’s estate could increase by hundreds or even thousands of pounds.

The probate fees what the executor or administrator must pay to obtain the grant of representation, which is usually essential for getting access to a deceased individual’s bank accounts, shares, and other assets.

The estate can be used to pay this fee – however, before obtaining the grant, the executor is unlikely to be able to access much of the funds tied into the estate, meaning it must be initially paid for out of their own pocket.

The fee is currently charged at a flat rate of £215 (or £155 if the application is made by a solicitor). The proposed new approach would see fees levied based on the value of the estate before inheritance tax, with the fees reaching £1,000 for estates valued at between £300,000 and £500,000.

For estates worth more than £2m, the fee will go up £20,000, an increase of almost 10,000% for executors acting alone.

However, there is good news for those with estates worth less than £50,000 – these estates will no longer be required to pay tax. The government estimates that this will spare an extra 30,000 estates the burden of paying probate fees.

Here’s a breakdown in full of the proposed fees:

Value of estate New fee Approximate increase
Up to £50,000 £0
More than £50k, up to £300k £300 40%
More than £300k, up to £500k £1,000 365%
More than £500,000, up to £1m £4,000 1,760%
More than £1m, up to £1.6m £8,000 3,621%
More than £1.6m, up to 2m £12,000 5,481%
More than £2m £20,000 9,202%

Why the increase in fees?

The Ministry of Justice estimates that the new fees would raise an extra £250m a year, going some way to covering the £1.1bn shortfall in court revenue.

“Court fees are never popular but they are necessary if we are, as a nation, to live within our means,” said Shaliesh Vara from the Ministry of Justice. “These proposals would raise around an additional £250m a year, which is a critical contribution to cutting the deficit and reducing the burden on the taxpayer of running the courts and tribunals.”

He also made assurances that the new fees would not be as heavy a burden as they might initially appear.

“84% of estates would pay £300 or nothing and 94% of estates would pay £1,000 or less,” he said. “The maximum fee of £20,000 would only be paid by the very wealthiest estates, worth more than £2 million.

“The fee would never exceed 1% of the value of the estate and in many cases it would be considerably less.”

However, like most Ministry of Justice proposals, the plan has come under fire. Jonathan Smithers, president of the Law Society, said that the fees were disproportionate to the work involved for granting probate.

“Many people would regard a progressive fee structure as a fairer way to charge for the service, but the fees proposed for high value estates do not bear any relation to the work or value involved,” said Mr Smithers.

These sentiments were echoed by Moore Blatch partner Joyce Bradbeer, who also questioned whether the MoJ had considered whether executors would be able to pay the fee before they obtain the grant of representation.

“Although moving the proposed fee structure from a flat to a banded fee is, in certain cases, deemed fairer and more progressive than the current structure, it also means that those with larger estates will be paying significantly more, even though the work that the Probate Registry has to do is virtually the same whatever the value of the estate,” she said. “But, more to the point, how are the executors going to raise the money to pay for this?

“Access to cash is extremely limited prior to the issue of the grant of representation.”

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