After the recent Autumn 2018 budget, the Government announced that probate fees are set to rise and that a sliding scale of fees will apply.
Before the general election last year, this was threatened, but put on hold due to the overwhelming objections to the proposed increases, which would have seen estates, for example worth over £2 million paying a £20,000 probate court fee, compared to the current fee of £155.
It has therefore come as a shock that the Government has gone ahead and confirmed that they plan to introduce a sliding scale of probate fees linked with the gross value of estates to enable the revenue generated to help fund the Courts and Tribunals Services.
Most, if not all, of our clients will be affected by this new fee structure, the details of which are shown below.
Up to £50,000 or exempt from requiring a grant of probate – nil fee
£50,000 – £300,000 - £250 fee
£300,000 – £500,000 - £750 fee
£500,000 – £1 million - £2,500 fee
£1 million – £1.6 million - £4,000 fee
£1.6 million – £2 million - £5,000 fee
Above £2 million - £6,000 fee
The view widely held is that this levy is akin to a ‘stealth tax’ and the legalities of its introduction are currently being debated. Many people are of the view that only one fee should apply as the administration process in dealing with grant applications is the same, irrespective of the size of the estate and therefore it is totally unfair that larger estates should, in effect, be paying higher fees.
We shall have to see how this will all unravel and hope that sufficient pressure/debate occurs to squash this new probate fee scale which currently presents itself as a new death tax being introduced through the back door.
It has been suggested that the fee increase may occur in April 2019 but there is no certainty on this date.
If probate court fees are increased, then families will have to consider how probate fees will be funded – perhaps use of life policies written in trust can be used or possibly other methods of enabling funds to be available will need to be found. We do suspect that banks and building societies will be alive to this issue and that, as for funeral expenses, they will agree to release funds to pay probate court fees, although no details have been released on this point by the financial industry yet.
We will keep our clients updated on developments through our website as and when there is further news.