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Another tax on death (by a different name)

22 November 2016

Earlier this year it was announced that the government is planning a huge rise in the fees charged for grants of probate. Final details of what is proposed, including the date from which the changes will apply, are yet to be announced but what is certain is that, if the proposals go ahead, many executors and administrators will soon find themselves faced with a much higher initial outlay to deal with the administration of an estate.

The current system requires a flat fee to be paid to the Probate Registry, regardless of the value of the estate (unless it is worth less than £5,000 in which case there is no fee). The fee for a grant extracted by a solicitor is £155. When an application is made by an individual personally the fee is £215.

This flat fee scheme has been in place since 1999. Before then (between 1981 and 1999) the probate fee was linked to the value of an estate and something similar to this is what the government now intends to reintroduce, using a banded approach.

The proposed probate application fees are as follows:

  • £300 for estates worth more than £50,000 and up to £300,000
  • £1,000 for estates worth more than £300,000 and up to £500,000
  • £4,000 for estates worth more than £500,000 and up to £1 million
  • £8,000 for estates worth more than £1 million and up to £1.6 million
  • £12,000 for estates worth more than £1.6 million and up to £2 million
  • £20,000 for estates worth more than £2 million.

The Ministry of Justice argues that reform is needed to ensure long-term sustainable funding for Her Majesty’s Courts & Tribunals Service (HMCTS) to improve the overall efficiency of the service and to address the country’s deficit. Figures quoted suggest that the current shortfall each year is £1.1 billion, between the cost of running the courts and tribunals administered by HMCTS and the income received.

Technically, by capping the fee at £20,000, it will never exceed 1% of the value of the estate. It is also suggested that by increasing the threshold value of estates exempt from paying fees from £5,000 to £50,000, some 30,000 estates per year will now pay no fee at all.

There are concerns that executors and administrators, or the solicitors representing them, may struggle to find the money to meet the cost of the increased probate fees. This is because these fees have to be paid before the assets of the estate can be released.

The whole probate process will therefore become more difficult and time-consuming. Many argue that the fees are not justified as the value of an estate has no bearing on the process involved in issuing a grant of probate and therefore it is merely another tax on death.

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Simon Cook LLB (Hons), TEP
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