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MTD

Probate fees: new structure, big increases

3 December 2018

 

Probate fees in England and Wales are set to change. The government has announced that it plans to introduce a new fee structure for grants of probate.

The new structure will reportedly be implemented next April. By then, the government will have published Guidance on Ways to Pay for Probate Fees.

Why the probate fee increase?

A new fee structure was proposed in February last year. The General Election led to these plans being shelved.

According to the statement by Lucy Frazer, the Ministry of Justice’s Parliamentary Under Secretary of State, the new fees will fund a reform of the Probate Service with three main benefits:

  • Facility to apply for grants of probate online
  • Access to digital support
  • Ability to make applications directly, rather than via a solicitor

How will probate fees change?

The current flat fee will be superseded by a banded fee model based on the value of the estate.

If the estate
is worth…
The new probate
fee will be…

Which means…
Below £5,000   £0 No change
£5,000 to £50,000   £0 £215 saving
£50,000 to £300,000   £250 £35 rise
£300,000 to £500,000   £750 £535 rise
£500,000 to £1m   £2,500 £2,285 rise
£1m to £1.6m   £4,000 £3,785 rise
£1.6m to £2m   £5,000 £4,785 rise
Above £2m   £6,000 £5,785 rise


Is this a change for the better?

Lucy Frazer has justified this structure by highlighting some of its strengths:

  • Raising the estate value threshold to £50,000 will lift around 25,000 estates out of probate fees each year
  • For 80% of estates which do pay, the probate fees will be no more than £750
  • Probate fees will never exceed 0.5% of the value of the estate

According to her statement, it ‘represents a fair and more progressive way to pay for probate services’.

However, there are concerns surrounding the plans. George Hodgson, Chief Executive of the Society of Trust and Estate Practitioners, has criticised it as ‘taxation … through the back door’ and a ‘burden on bereaved families’, bearing ‘no relation to the cost of probate’.

It is certainly hard to look at the proposed increase in probate fees as anything other than taxation by stealth. We are inclined to question whether it is really fair for the government to add an administration fee of up to £6,000 on top of a tax charge of 40%.

For more information on how BKL can reduce your administrative burden if you are the executor or administrator of a complex estate, read our probate page or use our enquiry form to get in touch.