Clients will be aware that the Government had plans to significantly increase probate fees back in 2016, but these were dropped ahead of the 2017 snap general election.
However, despite considerable opposition, the proposal reared its head again, and was confirmed in November 2018, with the Government arguing that significant rises to probate fees were necessary in order to make the court system fit for the 21st century. This was highlighted in the response by the Government to a consultation process which took place between February and May 2016, which was published in February 2017. You can read the response document here.
Currently there is flat fixed rate for probate application of £155 for applications made by professionals and £215 for applications made by an individual. Initial proposals called for a rise in probate fees to £20,000 fee on the largest estates, with an entry level £250 fee, and a higher entry threshold value of £50,000. There was significant opposition during the consultation process which saw the Government water down their original proposals as follows;
- Estates worth less than £50,000 will pay nothing, meaning estates worth between £5,000 and £50,000 will save £215 compared to the current system.
- Estates worth from £50,000 up to £300,000 will pay £250, a rise of £35.
- Estates worth from £300,000 up to £500,000 will pay £750, a rise of £535.
- Estates worth from £500,000 up to £1 million will pay £2,500, a rise of £2,285.
- Estates worth from £1 million up to £1.6 million will pay £4,000, a rise of £3,785.
- Estates worth from £1.6 million up to £2 million will pay £5,000, a rise of £4,785.
- Estates worth more than £2 million will pay £6,000, a rise of £5,785.
Altogether, the fee hikes will see an increase of up to 28 times for some estates, and the fees have no bearing on the actual cost of the service provided. The government expects to raise an estimated £145m a year from 2019/20 once the higher fees come into effect.
Much criticism has been levied on the process of bringing these proposals into effect. The Parliamentary Under-Secretary of State for Justice, Lucy Frazer, set out the plans for the draft Non-Contentious Probate (Fees) Order 2018 to committee members on 7th February 2019. The measure will not be debated in the House, the Minister confirmed, stating that it had been through committee stage and would be put into statute via a statutory instrument, which does not require a full parliamentary debate. Despite many condemning the fee hike as a stealth death tax, the Government are describing it as an ‘enhanced fee’, not a tax, and therefore falls outside the tax rules which require debate.
At the very least this substantial increase in the probate application fees will make individuals more likely to consider lifetime giving as part of their succession planning to try to minimise the probate fee their estate would have to pay. If you would like any advice with regard to estate planning, please contact our in house solicitor, Liz Hooley who specialises in such matters and would be pleased to help.