Probate fees: a new tax on death? Proposals for a significant increase in fees

The Parliamentary Under Secretary of State for Justice has laid before Parliament new legislation to implement a new, banded structure of fees for…

The Parliamentary Under Secretary of State for Justice has laid before Parliament new legislation to implement a new, banded structure of fees for obtaining a grant of representation when somebody has died.

To deal with a deceased person’s assets, a Grant of Representation (commonly known as a grant of probate or grant of letters of administration) is often required. This is a legal document to confirm that the executor or administrator (if there is no Will) has the authority to deal with a person’s assets (property, money and belongings).

The current flat rate fee for obtaining a grant of representation is £155 for Solicitor applications and £215 for personal applicants. Estates valued at under £5,000 are exempt from paying a fee under the current system.

The new proposals follow a consultation by the Government in 2016, which published proposals to introduce a new structure of fees where estates under £50,000 were exempt and the fee at the top band was £20,000 for estates worth over £2 million.

Since that initial consultation and the influx of concerns raised by service users and stakeholders which followed, the Government has now revised the proposed fee banding.

Under the most recently proposed fee model, below, estates valued at less than £50,000 are exempt and for those who do pay fees, the fee is never more than 0.5% of the value of the estate.

Value of estate (before inheritance tax) Proposed fee
Up to £50,000 or exempt from requiring a grant of probate £0
£50,000 - £300,000 £250
£300,000 - £500,000 £750
£500,000 - £1m £2,500
£1m - £1.6m £4,000
£1.6m - £2m £5,000
Above £2m £6,000

The Government has calculated that for those who are liable to pay a fee, around 80% of the applicants would pay £750 or less. The maximum fee will be £6,000, payable on estates worth over £2 million.

This will be a concern for those people who are ‘property rich’ and ‘cash poor’ and find themselves having to raise funds to discharge the probate court fee.

Applying for a grant of probate is entirely separate from Inheritance Tax. Inheritance Tax is levied on the value of a person’s estate at the time of their death and is calculated based on the value of the deceased’s assets and any reliefs which may be available to their estate.

The Government is keen to stress that a probate court application fee paid under the new scheme is not a “tax”, but rather “a service fee for obtaining a grant of representation”. Additional revenue raised will not, however, be used to maintain the probate court itself, which is already adequately funded by the fees generated from the current flat rate fees.

It is estimated that the new scheme will bring in an additional income of £145m per annum from 2019/20 and will rise to £185m in 2022/23. It is envisaged that the additional revenue created will allow the Government to subsidise other parts of the system that do not recover their costs in fees, including domestic violence proceedings in the family court and access to the mental health tribunal.

The written statement issued by the Ministry of Justice on 5th November 2018 expressly states that “It has long been the case that the users of our courts make a contribution to its costs, and we believe this remains both relevant and reasonable – minimising the burden on other taxpayers. Crucially, by asking those who use the courts to pay more, where they can afford to do so, we are able to fund areas where we charge no fees to vulnerable victims and users, including for example domestic violence and non-molestation orders, and for cases before the First-tier Tribunal concerning mental health.”

It difficult to reconcile the statements which have been released by the Ministry of Justice with the Government’s position that this proposal is not an increase in tax. The decision to allocate the additional revenue raised from increasing charges to those service users who can “afford” to pay towards the funding of other court services seems to be exactly that.

Sally Cook is a solicitor in the Wills Trusts and Estates Team

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