The spectre of an additional stealth tax on deceased estates has risen again and may mean that bereaved families, and their solicitors, will need to agree the paperwork in haste.
On 5 November 2018, Justice Minister Lucy Frazer MP announced that Parliament will be implementing a new structure of court fees to obtain a Grant of Probate, which will be banded and based on the size of the estate. A Grant of Probate is the legal authority for the Personal Representative of a deceased’s estate to sell or transfer the deceased’s property, money and personal possessions.
Currently, a flat fee of £215 applies if a Grant of Probate is applied for by friends or family, or £155 if a solicitor completes the process (which is very lengthy, although the Probate Registry side of it is not). The new legislation changes this system completely to charge probate fees at 0.5% of the value of the estate.
Estates valued at £50,000 or less will not have to pay any fees (compared with the current threshold of £5,000). However, estates worth over £50,000 will have to pay probate fees at 0.5% of the estate, up to a fee of £6,000. It was originally proposed, in early 2017, that a maximum fee of £20,000 should apply to larger estates, but this has now been reduced to £6,000. This still means a new fee of up to £6,000 (the maximum levy for estates worth over £2 million) will apply to estates where the probate application is made after the start date of the new fees. – a huge rise for grieving families.
There is a further problem for bereaved families: Personal Representatives have to pay the fee up front, which may result in the need for loans to cover the probate fees. Although the cost of the fee can be reclaimed from the estate once a Grant of Probate has been received, the probate process will require additional work and resources.
Ms Frazer explained that the fees will be set at a level to ensure that ‘they are only paid by those who can afford them, with all income going directly to courts and tribunals – ensuring justice is done, and protecting victims and vulnerable people’. It is expected that these fees will contribute to the shortfall in the £1.6 billion cost of the courts service and may thereby get around the rules against “taxes” without parliamentary approval, which blocked the previously proposed increase. Concerns remain that “the new legislation turns probate fees into an extra death tax”.
There is currently no date for the implementation of the new legislation; Personal Representatives and solicitors should prepare for needing a fast turnaround on reporting estates to ensure that, where possible, a Grant of Probate is obtained under the current fixed fee system, using estimated figures where permissible.
For more information, please contact Carolyn Bagley on 01908 247015 or click here
to email Carolyn.