The Ministry of Justice has confirmed that the fees charged for probate on some estates will increase by nearly £20,000.
The Government recently concluded a consultation on the matter which saw less than 2% of respondents in favour of the increase. Just 13 of the 831 respondents to the consultation backed the proposals, and only 8% agreed that probate fees should be set by reference to the value of the estate.
Regardless, the new fees will go ahead from May this year and it is thought that the Government will raise over £250 million from the increases.
Currently, probate fees are £155 for estates worth £5,000 or more for solicitor made applications. Under the new fee regime, this will increase to £300 for estates worth between £50,000 and £300,000 – with fees soaring for estates over the £300,000 mark. Estates valued at over £2 million will pay the highest fee of £20,000.
Probate is a document which allows the executors of the deceased’s estate to process the estate, sell property and distribute the assets in accordance with the Will.
They are different to Inheritance Tax which is charged at 40% on any part of the estate above the ‘Nil Rate Band’ of £325,000. Married couples each have this allowance and if they pass everything to their surviving spouse, the spouse then has a double allowance of £650,000. A new ‘Residence Nil Rate Band’ set to be introduced in April will increase this further to a potential £1 million – speak to our Later Life Planning team if you would like to know more about this.
Probate fees have to be paid even if the entire estate is left to the surviving spouse and no inheritance tax is due. The exception is for very small estates where no land or property is involved.
Old fees vs new fees
Currently all probate applications made via a solicitor for estates valued at £5,000 or more attract a £155 fee.
Under the new fee regime, probate fees will be as follows:
- £50,000 – £300,000 – £300 fee
- £300,000 – £500,000 – £1,000 fee
- £500,000 – £1 million – £4,000 fee
- £1 million – £1.6 million – £8,000 fee
- £1.6 million – £2 million – £12,000 fee
- £2 million plus – £20,000 fee
Estates under £50,000 will now not have to pay a probate fee. However, rising house prices mean that many estates will fall above that level. The average property value according to Nationwide is currently £206,000.
Lawyers are concerned that the new fees could put the elderly under financial pressure when trying to access money that has been left to them by their spouse – particularly where they are ‘asset rich’ and ‘cash poor’. For example, if the deceased’s main asset was a property worth £1 million held in their sole name, their surviving spouse would need to find £8,000 in probate fees before they can transfer the property into their own name. If bank accounts have been frozen and funds are not available, the Government is assuming that either executors or beneficiaries will pay the fees themselves – but this may not always be realistic. Other lawyers have pointed out that probate is a purely administrative function and the value of the estate has no effect on the amount of work undertaken by the Probate Registry. They are calling the hike in fees an unfair form of taxation.