Proposed Probate Fee Hike

The Ministry of Justice (MoJ) has announced that it will go ahead with increased probate fees, despite overwhelming opposition (overwhelming being that less than 2% of those surveyed agreed).

This will mean that from May of this year, there will be charges of £20,000 for anyone inheriting an estate worth more than £2m.

Obtaining a grant of probate is the process where someone is given the authority to deal with the property, money and possessions of a person after they die. It is usually enacted by the executor of a will or a person acting on their behalf.

Whereas the current system is a flat fee of £215 (£155 when applied for through a solicitor or approved accountants such as CBSL), the new system is formed using a ‘sliding scale’ approach to fees. Estates below £50,000 (previously £5,000) will be exempt from charges and estates valued between £1.6m and £2m will be charged at £12,000.

Below is a comparison of the current and proposed fees:

Whilst it seems great that the exemption threshold has increased tenfold, in reality, probate often isn’t needed for these estates anyway as they are simple to deal with.

Here in Shropshire, the new structure is not good news for families who are asset-rich but cash-poor, such as rural families with small farms. Even if these rural estates qualify for 100% Agricultural Relief under Inheritance Tax rules, the probate fee would still need to be paid.

Older people may now feel under pressure to give away assets during their lifetime rather than leave them to family members in the will, in fear of leaving the burden of huge probate fees. The fee could be paid by cash left in the estate should it be released by the bank/building society, assuming that there is sufficient cash. It has been suggested that those who cannot pay the charge this way could seek a personal loan. This at a time which is incredibly hard already.

George Hodson, chief executive of the Society of Trust and Estate Practitioners (STEP), said that he was ‘very disappointed’ that the MoJ have gone ahead with the new system, which he describes as ‘a new tax on bereaved families’. The MoJ have openly said that they wish to raise around £250m to help fund the Courts and Tribunal Service, but it seems unfair that the bereaved should be picking up the bill. What was originally a small fee has seemingly turned into a tax on the bereaved. However, if we wait around for any form of justification, I think we will be waiting a while.

Should you wish to discuss any probate needs further, please do give us a call or pop in for a chat.

*All information is correct at the time of writing, and some may be subject to change