The government has announced changes to probate fees in England and Wales from April 2019.
What is probate?
When someone dies owning assets, their executor will often need to apply to the Court for a grant of probate or, if the deceased did not leave a Will, a grant of letters of administration. The grant is a legal document which confirms that the executor or administrator has the authority to deal with the deceased person’s estate.
How much is the current probate fee?
Probate applications are currently (December 2018) charged at a flat rate of £155 if made by a solicitor and £215 if made by an individual. These fees apply to estates worth £5,000 or more.
What changes to probate fees are being introduced for 2019?
From April 2019, the threshold at which the probate application fee becomes payable is to be raised to £50,000 which, according to the Ministry of Justice, means an extra 25,000 estates per year will not pay any probate fees.
However, if the value of the estate is more than £50,000, the probate fee is set to rise and will be based on a sliding scale depending on how much the estate is worth.
- Estates worth between £50,000 and £300,000 will pay £250;
- Estates worth between £300,001 and £500,000 will pay £750;
- Estates worth between £500,001 and £1 million will pay £2,500;
- Estates worth between £1,000,001 and £1.6 million will pay £4,000;
- Estates worth between £1,600,001 and £2 million will pay £5,000; and
- Estates worth more than £2 million will pay £6,000.
Although these new fees are considerably less than those previously proposed, and quickly shelved, by the government in 2017, they still represent a significant increase on the current fees.
Why are probate fees being increased?
The government hopes that the new fees will generate £145 million in additional income in 2019/2020 rising to £185 million in 2022/2023, money it claims will be spent on running the courts and tribunals service.
Critics have described the increase as a stealth tax aimed at wealthier estates. As the procedure for issuing a grant is the same for the probate registry regardless of the value of the estate, it is difficult to disagree with this view.
What can I do to avoid the increase?
Unfortunately, there is little that can be done to avoid the new probate fees, apart from lifetime gifting and joint ownership, both of which must be carefully managed.
It is still unclear how executors will pay the probate fee where assets are frozen until after receipt of the grant of probate. The government is due to issue a document entitled Guidance on Ways to Pay for Probate Fees which will help executors choose an option to pay which most suits their circumstances. But for those with larger estates, it may be worth considering how their executors will pay the fee.
Any executors of estates where a grant of probate has not yet been obtained and where an increased fee is likely to apply should try to get the probate application in before next April.
How we can help
If you have any questions about the new probate fees or if you would like assistance in obtaining a grant, you can speak to Vanessa Swales on 0808 139 1606. Alternatively, you can email us at [email protected].