The Government has unfortunately resurrected the plans which were, luckily, dropped last year to increase the application fees required to apply for probate.
Currently, probate fees are a flat fee of £155.00 (plus £0.50 per each copy) for solicitors applying for probate and £215.00 for individuals. Estates which are worth up to £5,000 are exempt.
Now, the Government has released a written statement under which a new structure will be introduced in April 2019. According to the proposal no fee is payable for applications where the net value of the estate does not exceed £50,000, replacing the current £5,000 estate exemption.
The flat fee mentioned above will be replaced by a fee, which is determined by reference to a scale based on the net value of the estate and so would introduce the following increased application fees:-
- Estate between £50,000 and £300,000 the proposed fee is £250;
- Estate between £300,000 and £500,000 the proposed fee is £750;
- Estate between £500,000 and £1,000,000 the proposed fee is £2,500;
- Estate between £1,000,000 and £ 1,600,000 the proposed fee is £4,000;
- Estate between £1,600,000 and £ 2,000,000 the proposed fee is £5,000;
- Estate exceeding £2,000,000 the proposed fee is £6,000.
Executors will be required to pay the new proposed fees in advance as the majority of institutions do not release funds from the estate before the Grant is issued, unless it is for funeral expenses or inheritance tax. So, the burden of paying the increased fees would fall on the Executors, who, if they do not have sufficient funds may need to obtain a loan to cover the initial costs, which they can be refunded once the Grant has been obtained. Alternatively, a fair proposal would be to allow financial institutions to add the option to release funds to pay the increased application fees by sending the money directly to the Probate Registry. This would help Executors who might face difficulties in raising the money or facing debts.
Compared to the previous proposals, the increased fees are noticeably lower, however they are still high and arguably unjustifiable. The work load and the work completed by the Probate Registry remains the same whether the estate is worth £50,000 or £5 million. So many opponents to the new proposals argue this is a new form of taxation, which inevitably affects wealthier estates.
The question therefore remains as to whether the new proposals for the increased fees is simply an introduction of a new form of tax due from estates, which may also be liable to pay inheritance tax at a rate of 40% which is one of the highest inheritance tax rates in the world.
We must therefore watch this space……………………