Decision published by Government on its consultation of Probate Court fees
28 February, 2017
Last summer the Government consulted on proposals to change the fee structure for a Probate Court application. The current fee for the Probate Court to confirm the validity of a Will, and allow the administration of someone’s estate, after their death, is £155 (or £215 for those making the application without a solicitor).
Probate is obligatory to access the assets of a deceased person, unless their estate is very small and the bank or other institution holding their funds decides not to insist on this. That is usually where the estate doesn’t exceed their discretionary limit, around £15,000- £20,000. Pension funds, joint assets and some life policies fall outside of this requirement too.
Responses to the consultation have now been published by the Government with its decision. It has ignored the overwhelming number of respondents by proceeding with a huge rise in the fee for the Probate Application. At the time of the consultation, we responded to say that the court administration time to handle each application is the same, whether the estate is worth £1 or £1,000,000.
The Probate Registrar issues the Grant (the Court’s sealed permission) to the deceased’s representatives when it has confirmed that the Will is valid or the applicants are entitled to administer the estate, if there is no Will. Some estates or wills maybe more problematic than others but the value is irrelevant to the court process.
The new proposed fees are anticipated in May. Therefore for some estates, where the individual has now died, there could be a huge difference in fees if there is a delay in making the Probate application. The fees will now be directly related to the value of the deceased’s estate and will be in addition to any Inheritance Tax payable. In the consultation there was a suggestion that many estates have exemptions from Inheritance Tax. That may be true but there are certainly, also, many that do not, with no offset against the tax for these fees.
This is effectively a stealth tax or an additional tax on death. The deceased’s funds are frozen until the Grant is issued. Banks will release funds at this time for Inheritance Tax and funeral bills only. There is discussion about also advancing the fees for the Probate Registry, however the deceased will need to have significant cash resources to facilitate this as well. Otherwise a bank loan against the estate (at some expense) or a loan from the Executor or family member would be required. There is a suggestion, in the report, that where Solicitors are Executors they will fund this. However, as most practices are businesses in their own right would they (or indeed any individual executor) have the cash flow to effectively lend this money to an estate?
By way of example – we have a couple of estates for which we are about to submit the application for Probate. First Inheritance Tax has to be paid on these, which must be receipted before we can apply to court.
The first estate is valued at £2.1m with the Inheritance Tax due of £630,000 (after some reliefs but with some lifetime gifting caught). If we submit the application before the change (anticipated in May) the fee will be £155. If not, the executors will then need to find another £20,000 for the probate fees as per the table below.
We are acting for executors of a second estate and are currently gathering the information to proceed. It is anticipated that this will exceed £1,000,000 and so have an estimated Inheritance Tax bill of £270,000. If the application goes to court after the changes the estate will pay £8,000 for court fees, instead of £155.
The report on the consultation can be read on the link below
In this report (page 4 para 9) the reforms are expected to “deliver around £300 million in additional income per year – a substantial contribution to the running costs of HMCTS” and in another part (page 13 para 60) it quotes that “around 270,000 applications for a grant of probate” are made each year. If that is the case then at the current fee level of £155 per application the Probate Service already raises £41,850,000. So the expectation, with the new fees is that this is will rise to £341,850,000. The report does not give any information on the cost of running the service which raises the question of whether the bereaved will be subsidising other branches of the courts.
Unlike litigation or other applications to Court, which are optional when disputes cannot be resolved by other means, an application for Probate is compulsory to release the deceased’s assets. The Society of Trust and Estate Practitioners and other professional bodies will be lobbying the Government about these proposals but, having ignored all the comments already received, this tax on estates is likely to proceed.
Head of Private Client Department
Member of the Society of Trusts and Estate Practitioners (STEP).
|Proposed Probate Fees from May 2017:|
|Estates up to £50,000||£0|
|£50,000 to £300,000||£300|
|£300,000 to £500,000||£1,000|
|£500,000 to £1,000,000||£4,000|
|£1,000,000 to £1,600,000||£8,000|
|£1,600,000 to £2,000,000||£12,000|
|£2,000,000 or more||£20,000|