Significant Increase in Probate Fees
On the 5th November 2018, Justice Minister Lucy Frazer MP announced an increase in probate fees from April 2019.
A grant of probate is a court order obtained by the executors which provides the authority to deal with the estate of someone who has died. There are currently flat fees of £215 if you apply yourself, or £155 if a solicitor applies on your behalf and there are no fees if the estate is worth below £5,000. The new fees will be based on a sliding scale of between £250 and £6,000 (where payable) depending on the value of the estate.
The good news is that the threshold for estates where no fees will be payable will increase from £5,000 to £50,000. However under the new proposals, estates within the £50,000 to £300,000 bracket will pay £250 in probate fees and those worth between £300,000 up to £500,000 will pay £750. Above that the fees become much more expensive. Under the new sliding scale, estates worth between £500,000 and £1,000,000 will pay £2,500, those between £1,000,000 and £1,600,000 will pay £4,000, those between £1,600,000 and £2,000,000 will pay £6,000. This is a significant reduction from the initial proposal back in February 2017 when it was suggested that estates worth £1,000,000 should pay £8,000 in fees whilst those worth more that £2,000,000 would pay £20,000. However, this is a significant increase from the current position.
The government justify the increase by indicating that approximately 25,000 estates each year will be exempt from probate fees and suggest that 80% of estates will pay under £750. We would, however, point out that 100% of the estates currently pay less than £216.
Whilst we acknowledge the government has confirmed the fees will be under 0.5% of the value of the estate, the majority of those paying these fess are also paying inheritance tax at the rate of 40% on vast chunks of the estate.
The government has indicated that there will be several ways to pay fees which are recoverable from the estate but this has again raised concerns given it is difficult to access money from the estate until a Grant of Probate has been obtained.
The introduction of these increased fees is a timely reminder not to delay in applying for a Grant of Probate. If you are an executor and need to deal with an estate worth over £500,000, you should act promptly to ensure that you can apply for a Grant of Probate as soon as possible to ensure that the application is made before the implementation of the increased fees.