Increases in probate fees
March 2017 No: 2
In addition to inheritance tax which is charged at a rate of 40% on all assets over £325,000, bereaved families have to pay the cost of obtaining a grant of probate.
Estates are currently charged a flat fee of £155.00 (if probate is applied for through a solicitor). Many solicitor’s firms stand the cost of applying for the grant of probate and then add it to their invoice once funds are available.
From May 2017, probate fees on some estates will increase to £20,000, as the Ministry of Justice confirmed it will push through a massive hike to charges for processing forms, despite rejection in a consultation.
The huge rise in the fees for applications for grants of probate – dubbed a ‘stealth tax’ on estates – comes despite less than 2 per cent of respondents in a consultation agreeing with the new charges.
The proposed charges are as follows:
- Up to £50,000 or exempt from requiring a grant of probate Fee: £0.
- Exceeds £50,000 but does not exceed £300,000 Fee: £300.
- Exceeds £300,000 but does not exceed £500,000 Fee: £1,000.
- Exceeds £500,000 but does not exceed £1m Fee: £4,000.
- Exceeds £1m but does not exceed £1.6m Fee: £8,000.
- Exceeds £1.6m but does not exceed £2m Fee: £12,000.
- Above £2m Fee: £20,000
Experts are concerned because probate fees must be paid up front, and while many families have a valuable property they may have very little in savings and solicitors may be reluctant to stand such high costs on costs on behalf of their clients.
SFE (Solicitors for the Elderly), an independent, national organisation of lawyers published the following response; “SFE is extremely disappointed to see that the consensus to reject the proposed probate fees has been ignored”.
“For the 62% of estates that use a solicitor, probate registry performs a purely administrative role, and the value of the estate has no bearing on the work undertaken.
“To burden larger estates with a significantly larger fee is an unfair form of taxation. For people in this situation, their property is often their primary asset, and they have little cash to pay for higher probate fees, on top of other necessities such as IHT or the use of a solicitor.
“The increase in probate fees will place a burden on families at a sensitive and distressing time and is likely to put people who are vulnerable and/or elderly at risk. Our fear is that such clients might be persuaded to take steps to avoid probate fees, even if the effect is to leave them with insufficient assets to provide for themselves for the rest of their life.”
If you have any queries about how the change will affect you, please feel free to contact Kirsten Bradley on 01772 881000.