Government reintroduces probate “death-tax”

23 / 11 / 2018

The Government has announced that it is reintroducing its controversial proposals to increase the costs of applying for grant of probate that they originally tried to get through Parliament in April 2017. Under the proposals, the maximum fee for applying for probate will rise from £155 to £6,000, an increase of 3,771%.

At present, the cost of applying for a grant of probate is a flat fee (£155 for an application through a solicitor; £215 for a personal application) and is not linked to the value of the estate. Under the proposed new regime, the fee will move to a banded system according to the net value of the deceased’s estate subject to the grant. The new fee bands are proposed as:

In an effort to ensure the proposals pass through Parliament and appease the many who opposed the divisive plans, the proposed fees have been reduced from that originally proposed, which would have seen a maximum fee of £20,000, but have nevertheless met with similar opposition amongst professionals and the public so far.

The Government’s principal reason for the new fee regime is to fund a large shortfall in the running of the court service in England and Wales. However, the Probate Registry is just one aspect of the court service and is self-funding: the cost of a probate application meets the cost of the service involved and no more. The Government consulted upon the original proposals and the unfairness of the situation was picked up in the 853 consultation responses (of which 695 were against increasing the fees in line with the size of the estate). Wedlake Bell responded on behalf of our clients and opposed the fee proposals.

The Government is not consulting on these new proposals and seemingly expects for them to be enacted. However, a House of Lords Committee report on 21 November 2018 criticised the proposals, as it did the first time the contentious charges were announced. The Secondary Legislation Committee said it has not changed its view on the underlying principle, that the fee bears no relationship to the actual cost of approving the probate application, “has the appearance of a tax” and is an “abuse of fee-levying power“. The committee added: “In considering the policy the house may wish to bear in mind that those with higher value estates will already be contributing to the Exchequer through inheritance tax and stamp duty of up to 12% if a property is sold. It is also worth remembering that such estates are often divided between a number of beneficiaries, many of them charities.”

It therefore remains to be seen whether the Government’s proposals will be successful, at least without further justification being provided by the Ministry of Justice, but clients should nevertheless be aware of the proposals and the possible impact on their estates. If enacted, it is expected that the new fees will take effect from April 2019.

This could mean that estates where the deceased died before April 2019 could be subject to the new fees if the application cannot be finalised and submitted before then. If confirmed, executors who are preparing an application for probate will need to act quickly so as to benefit from the fees at their current level.

We will update this article when there are further developments. If the proposals go ahead, clients whose estates exceed £2 million will need to start considering their options, including how their estate will fund the fee if applicable on death.

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