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The Ministry of Justice has put forward plans to change the way probate fees are structured and charged. Probate fees apply when a Grant of Representation is made following the death of an individual. This grant then confirms the appointment of an executor(s) under the terms of a valid Will or in the case where a person has died intestate, the grant gives authority for administrators to act on behalf of the estate.

Earlier this year the Government put forward plans to change probate fees. The consultation period on this proposal is now closed and the powers that be are considering the responses.

What exactly is happening?

Currently for all estates worth £5,000 and over, a flat fee of £215 applies for individual applications or £155 for those applying through a solicitor. The Government wants this to be changed to a banded approach which would see the most expensive estates pay up to £20,000 for their probate fees.

The table below, with figures from the Ministry of Justice, shows how the proposed banded approach will work.

Value of Entire Estate Proposed Probate Fee
Up to £50,000 £0
£50,000 – £300,000 £300
£300,001 – £500,000 £1,000
£500,001 – £1m £4,000
£1m – £1.6m £8,000
£1.6m – £2m £12,000
More than £2m £20,000

Why it isn’t as good as it seems?

This new way of charging for probate would mean that around 30,000 people are exempt from any fees at all but the estates that sit between £50,000 and £300,000 will be charged £300 – a 40% increase in costs. The escalating costs in property over the recent years has meant that many estates have been pushed into the higher probate fee bands and will pay far more than £155 or £215 even though the amount of work does not change.

The Government has made no bones about it; the change in fee structure will recoup a lot of money for them: £256 million. Justice Minister Shailesh Vara has said that this money will ‘go towards cutting the deficit and reducing the burden on the taxpayer of running the courts and tribunals’.

The new structure is supposed to be ‘fair and progressive’ but has been called a ‘stealth tax’ by some. In the Summer Budget of 2015 the Government put forward plans for the change in Inheritance Tax which will eventually see many families and estates lifted out of the threshold altogether. However, it seems that these new probate fees could be a way of recovering the money that the government is missing out on.

Many who thought they would pay less inheritance tax due to this new nil rate band will lose miss out on saving with this probate ‘tax’: a classic case of giving with one hand and taking with another. For some estates they will have the double whammy of paying inheritance tax before the grant of probate, then paying a grossly enhanced probate fee.

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It has been suggested that this may lead to more individuals giving away lifetime gifts or making more use of trusts in order to decrease the value of their estate before they pass away, especially for those estates that just fall into the higher rate band.

If you would like any advice on the issues raised in this article, on inheritance tax planning or how our expertise can be utilised to deal with probate then call us today on 0343 507 5151 to speak to a specialist solicitor in the Wills, Trusts and Probate team. You can also email your query to actonit@gorvins.com or fill in our online contact form.