A sharp hike in the probate fees for larger estates has been announced by the government -resurrecting a plan that was dropped last year in the approach to the 2017 general election.
The fee for applying for probate is set to increase from April 2019.
Currently, the fee for probate is a flat £215 for individuals and £155 for those applying through a solicitor. Estates valued at less than £5,000 are exempt from the charge.
However, under the new rules, a sliding scale will be introduced to replace the current flat rates, with the charge linked to the size of the estate. The fee could range from £250 to as much as £6,000 for those with an estate worth over £2 million.
Increases aren’t as harsh as initially planned
However, estates with a value of £50,000 or less will now be exempt, compared to the less generous current threshold of £5,000. This will ensure an estimated 25,000 estates annually will pay no fee at all, with about 80% of applicants paying £750 or less.
While the increase in the probate fees is significant, the wealthiest estates will actually pay 70% less than was originally planned when the government announced probate fee changes last year. It was the outcry over this new ‘stealth tax’ in 2017 which convinced ministers to reconsider in the run-up to the election.
Last year’s plans would have resulted in a probate fee for some estates of up to 129 times more than the current rate. That proposed scale meant that estates worth between £1.6 million and £2 million would pay £12,000 in order to apply for probate.
However, despite the reduction to the planned fees, many are angry at the government for sneaking in this ‘death tax’ the week after the Budget announcement. Liberal Democrat leader Sir Vince Cable called the increase 'astronomic', saying “It has the potential to cause a lot of families a great deal of difficulty.”
It’s estimated that around 280,000 estates will incur fees which are more than the current flat rate of either £155 or £215 – with 56,000 of them paying between £2,500 to £6,000. Those applying for probate will be expected to pay the fee up front before claiming it back from the estate once probate has been granted, which could prove difficult for those with a lower income.
Money raised to be spent on the courts
The Ministry of Justice is expected to make an extra £145 million a year from 2019-2020 and £185 million a year by 2022-2023 from the increased charges, which will help plug a shortfall in the £1.6 billion cost of the courts service.
Justice Minister Lucy Frazer, in a statement made when laying the revised legislation before Parliament, emphasised that all money raised from the new fees will be spent on running the courts and tribunals service.
In the statement, Frazer insisted that ‘We have listened closely to concerns around early proposals. Fees will never be more than 0.5% of the estate’s value, and are recoverable from the estate. Fees will be set at a level to ensure that they will only be paid by those who can afford them, with all income going directly to our courts and tribunals – ensuring justice is done, and protecting victims and vulnerable people.’
Are fee increases justifiable?
Some have argued that that the increase in fees is unjustifiable. Probate fees cover the cost of a service; the government has increased the cost of this service, even though the probate process hasn’t changed and won’t require any additional work or resources.
Many see the extra cost as a death tax on bereaved families being used to prop up the legal system.
However, Justice Minister Frazer maintains that the increased fees are not a tax, but ‘an essential element of funding an effective, modern courts and tribunals service, thereby ensuring and protecting access to justice. This includes introducing changes to our Probate Service, who offer an important service to those who are bereaved.’
The Ministry of Justice said it will publish a guidance document before the Statutory Instrument comes into force.
If you, or anyone you know, are concerned about probate fees, please get in touch with Christabel Clappison on firstname.lastname@example.org or on 0113 288 5605.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.