New Probate Fees: A New Stealth Tax?

From May 2017, the cost of making a probate application is set to rise significantly.

Unlike Inheritance Tax, which varies depending on the value of the estate, the probate application fee to obtain a Grant of Probate or Letters of Administration had previously been a fixed administration fee to cover the costs involved in processing the applications and issuing the grants.

The current fee is £155.00 if a solicitor makes the application and £215.00 if anyone else submits the application. These fees are the same irrespective of the estate value.

The incoming sliding scale increase to the cost of making a probate application is greatly disproportionate to the administration service being provided. Therefore, the price hike is being seen by many as a stealth tax or an Ad valorem tax (a tax imposed based upon the value of the estate) rather than purely an administration fee.

The Government have also confirmed that the fee increase is intended to cover the costs of running the courts and tribunal services; however it will also undeniably raise significant sums for the Exchequer.

The New Probate Application Fees:

Estate Value £ Court Fee from May 2017
0 – 50,000 0.00
50,000 – 300,000 300.00
300,000 – 500,000 1000.00
500,000 – 1million 4000.00
1m – 1.6m 8000.00
1.6m – 2m 12,000.00
Above 2 million 20,000.00

 

Potential Problems

  1. The new application fee will create a “Catch 22” situation for many estates as executors and administrators will not have access to the deceased’s money until the Grant has been issued. Therefore, in many cases executors and administrators may not have the funds available to meet the probate application fee which will make it increasingly difficult to progress the probate.
  2. Law firms and executors will need to rely on loans to finance the applications but this could delay and complicate the administration of an estate in addition to increasing the costs of the administration.
  3. Appointed executors and potential administrators may be reluctant to take on these roles given the burdens and cost implications of administering an estate in the future. This may lead to more executors renouncing the appointments made under Wills and the refusal of potential administrators accepting the role.

How we can help?

Some assets can pass without the need for a Grant. We can review your personal circumstances and assets and look at the options that are available to you. Whether creating a trust or transferring a property into joint names in an attempt to avoid the need for your family and beneficiaries to apply for a Grant of Probate we can assist you in finding the appropriate and cost-effective solution.

What can you do right now?

Despite almost total opposition to the changes during the consultation period the new probate fees will come into effect in May 2017.

However, a petition is currently on-line requesting that the Government review the new probate fees. Until 7th September 2017 there is still time to raise an objection to these changes. If you believe that the new fees are disproportionate or unreasonable have your say by signing the petition below:

https://petition.parliament.uk/petitions/188175

For further information or enquiries please contact Genevieve Gallagher on 020 7408 8888 or genevieve.gallagher@dwfmbeckman.com.

Genevieve is an Associate solicitor within the Private Client and Wealth Management department of DWFM Beckman.