Unfortunately, the order, which comes into force in April 2019, is no April Fool and sets out a new sliding scale structure for probate fees.
Since 2014, there has been a flat fee of £215 when applying for probate in person or £155 when applying via a solicitor. From April, the fee will depend on the estate’s net value, i.e. the value of the estate less any debts due at the date of death.
| Value of Estate | New Fee | Difference* |
|---|---|---|
| £50,000 and below | £0 | – |
| £50,000 to £300,000 | £250 | £35 |
| £300,000 to £500,000 | £750 | £535 |
| £500,000 to £1m | £2,500 | £2,285 |
| £1m to £1.6m | £4,000 | £3,785 |
| £1.6m to £2m | £5,000 | £4,785 |
| Above £2m | £6,000 | £5,785 |
* difference between the new fee and the personal application fee of £215.
While the order may come as good news for estates valued at less than £50,000, many estates will see a substantial increase in probate fees.
The contentious issue
The order has been criticised for several reasons, mainly because it increases the probate fee in line with the estate’s value. This increase has been described as an “enhanced fee” by Justice Minister Lucy Frazer. However, it is essentially just another tax. The fee is payable in addition to Inheritance Tax, which currently stands at 40%. It has therefore been labelled a “stealth tax” and even a “death tax”.
It has been argued that the fees must be increased to fund the additional work the court must undertake when issuing a Grant of Probate for larger estates. This is not strictly true, as a high-value estate may not necessarily have more assets than a lower-value estate. Some MPs have even agreed that the Probate Registry doesn’t necessarily do more work when issuing a Grant of Probate for larger estates.
Is there anything positive about the order?
The original proposal was to increase probate fees so that larger estates would face fees of up to £20,000. This caused a furious outcry from many interested parties, and the proposal was then scrapped in light of the impending general election on 8 June 2017. These estates will now pay £6,000, a saving of £14,000 compared to the earlier proposal.
Who pays and when?
This fee is payable when making an application for a Grant of Probate. This means it is payable before many of the deceased’s accounts or investments have been realised. The query then arises as to who will pay the fee. The bereaving family? Allegedly some Ministers have brushed off the fee increase and suggested that the family can apply for a loan to pay the “enhanced fee”.
From April 2019, careful consideration is needed when planning the distribution of your estate to ensure that your beneficiaries aren’t left with an upfront cost of up to £6,000.
For further advice and information, contact James McMullan today.
Notes:
(1) This is not legal advice; it is intended to provide information of general interest about current legal issues.
(2) This article was published on 4 March 2019 and amended on 26 March 2019 to reflect the current political delay to the Non-Contentious Probate (Fees) Order 2018 becoming statute.