Increase to probate fees

Tax Comments Off on Increase to probate fees

The government is to go ahead with plans to move from the current flat fee for applications for a grant of probate to a banded structure where fees increase in line with the value of the estate, up to a maximum of £20,000,

Currently, a £215 flat fee applies if probate is applied for by friends or family or £155 if a solicitor completes the process.

The existing fees reflect average administration costs and currently generate around £45m per annum in income for HM Court and Tribunal Service (HMCTS).

From May 2017, fees will reflect the value of the estate before inheritance tax rather than charging a fixed fee.

Under the new structure the fee payable for applications of grants of probate for estates valued at >£2M face will be £20,000.

That fee reduces to £12,000 for estates of £1.6M to £2M and reduces further to £8,000 for estates in the £1M to £1.6M bracket.

For estates valued between £500,000 and £1M, the fee is £4,000 and for estates with between £300,000 and £500,000 the fee is £1,000.

For an estate which exceeds £50,000 but does not exceed £300,000 the fee will be £300.

However, the threshold below which no fee is payable for applications for grants of probate will be increased from £5,000 to £50,000.

In addition, under the new measures, probate fees will be removed from the general fee remissions scheme (‘help with fees’) but provision will remain for exceptional fee remissions to be granted, where the executor can show that they have exhausted all reasonable means of funding the grant of probate application.

The Probate Service will also be able, via a limited grant of probate, to provide limited access for executors to the assets of the estate, for the sole purpose of paying the necessary fees.

In summary this means that if your estate is worth £1M or more your executors will have to pay a fee between £8,000 – 20,000 just to carry out the wishes in your will.

If you have a large estate it may be worth considering the use of trust planning not only to reduce the value of your estate for inheritance tax purposes but also to benefit from a lower probate charge.

Alternatively, if you are concerned about how your estate beneficiaries will pay the probate fees it may be worth leaving sufficient funds in a life insurance policy written into trust, which can be accessed on death without the need to obtain probate.

If you would like to discuss these issues and how they may affect your estate or explore the implications of using a trust in your inheritance tax planning then please contact Anthony Whittaker in our Trust Department.