Change to Probate fees - increase on IHT by stealth?

On 5^th November, the Ministry of Justice provided on update on plans for new legislation to implement a new, banded structure of fees for grant of probate. The plan was originally put forward in May 2017, and it has been confirmed that it will now be revisited.

Tiered fee system

The proposal was for the introduction of increased probate fees on a tiered system based on the deceased’s assets. This tiered system confirmed that lower value estates, up to £50,000 would be exempt from probate fees whereas those with assets of more than £1m will have to pay probate fees of between £8,000 and £20,000.

As part of the Governments £1 billion investment to modernise and upgrade the courts system for the better of everyone, according to Justice Minister, Lucy Frazer, who states that the introduction of changes to the Probate service is part of this to help fund such an improved Probate service to bereaved relatives and friends.

At present the fee for probate is a flat £215 for individuals and £155 for those applying through a solicitor. Estates valued at under £5,000 are exempted.

As proposed in 2017, the government will increase the value threshold from £5,000 to £50,000, lifting an estimated 25,000 estates annually out of fees altogether. About 80% of applicants will pay £750 or less according to Frazer.

Frazer states that by raising the estate value threshold from £5,000 to £50,000, around 25,000 estates annually will be lifted out of fees altogether. For those who do pay, around 80% of estates will pay £750 or less, and all income raised will be spent on running the courts and tribunal service.

According to HM Land Registry data, the average property value in the UK is at £232,797. With the new proposed increase, an estate value of £250,000 would see a probate application fee of £1,250 – nearly six times more than the current fee.

Probate costs

From April 2019 the proposed Probate tiered fee system will see the following changes:

• Estates worth under £50,000 will pay nothing and will save £215 compared to the current fee structure.
• Estates from £50,000 to £300,000 will pay £250, an increase of £35.
• Estates between £300,000 and £500,000 will pay £750, up by £535.
• Estates between £500,000 and £1 million will pay £2,500, up by £2,285.
• Estates between £1 million and £1.6 million will pay £4,000, up by £3,785.
• Estates worth between £1.6 million up to £2 million will pay £5,000, an increase of £4,785.
• Estates worth more than £2 million will pay £6,000, an increase of £5,785.

The Law Society responded by accusing the government of ’increasing inheritance tax by stealth’, protesting that the changes will avoid parliamentary scrutiny as they will be introduced through statutory instrument.

The Ministry of Justice confirmed they would be publishing a guidance document before the Statutory Instrument comes into force, entitled Guidance on Ways to Pay for Probate Fees.

BTWC MD, Trevor Cross, comments “The changes to the probate fee structure is not entirely unexpected and has been anticipated for some time. Whilst some will gain from the changes, a large proportion of the population will see their families facing significantly higher fees than before making the importance of planning ahead more essential than ever.”

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