Following a recent consultation, the Ministry of Justice has announced significant changes to probate charges in England and Wales. Here, we explore the details and the implications.
The recent Government consultation sought to explore the options relating to raising the Court Fees charged to obtain a Grant of Representation (commonly referred to as a Grant of Probate), which is the document needed by the Personal Representatives of a deceased person’s estate to administer the estate.
Currently the court fee to obtain a grant via an application made through a solicitor is £155 (this is payable on top of the solicitor’s fees to deal with the application or the administration of the estate). To make a personal application, without the assistance of a solicitor, the fee is £215 and there is no fee charged if the estate is below £5,000.
The new fee structure means significant changes to the system, basing fees on the value of the estate, broken down as follows:
Value of Estate (before Inheritance Tax)
Proportion of Estates in England and Wales
Up to £50,000 (or not requiring a grant)
Over £50,000 but under £300,000
Over £300,000 and up to £500,000
Over £500,000 and up to £1 million
Over £1 million and up to £1.6 million
Over £1.6 million and up to £2 million
Over £2 million
This new fee structure will eliminate the court fee for almost 60% of estates, however, it should be noted that the majority of estates that fall into this bracket are currently administered without the need to obtain a grant of representation and so are not paying a fee in any event. In real terms, the new fees represent a colossal rise in the fees to be collected by the Probate Registries.
In real terms, the new fees represent a colossal rise in the fees to be collected by the Probate Registries
This increase comes at a time when the government is investing £1 billion in our courts and tribunals service - which is indeed much needed and welcomed by the legal profession. It is hoped that the increase in the Probate Court fees - the Probate Service is a relatively small sector of the Courts Service - will raise £300 million towards this investment.
It is fair to say that those that responded to the government’s consultation - including solicitors’ firms such as Berwins, individual lawyers, professional bodies, members of the judiciary and members of the public - were overwhelmingly against the proposals and the increased fees these mean for individuals.
However, subject to parliamentary approval, the fee rises are expected to come in this May. It is our understanding that the new fees will be applied according to the date applications are received by the Probate Registries, rather than the date of death of the person whose estate is being administered.
Costs as a Form of Taxation
The main objections to the proposals from the legal profession were that the new fees were disproportionately high weighed against the cost to the courts of providing the Probate Service. Also, the cost to the Court of issuing a grant does not vary according to the size of an estate as roughly the same amount of work is involved for the majority of cases.
As such, many in the profession regard the new fees as a form of taxation rather than a fee for the service provided. The government considers the new fees to be justified as the anticipated revenue is necessary to fund the Court Service and to ensure continued access to justice for all. It is also argued that no estate will pay more than 1% of its value in fees, although it should be noted that the fee is calculated on the value of the estate before Inheritance Tax is paid.
The main objections to the proposals from the legal profession were that the new fees were disproportionately high
Unlike Inheritance Tax, we understand that there will be no exemptions available for estates that are passing to a surviving spouse or to charity. Equally there has been no indication that estates that qualify for tax exemptions because they include businesses or agricultural assets will be exempt from the fee, so there is a real concern that the fee could impact some people’s livelihoods. Some estates may also consist of property but very little cash, which could cause difficulties in finding the money to pay the fee upfront or the fee could even affect a beneficiary or joint owner’s ability to remain in their home.
It is anticipated that bridging loans will be made available by the banks for executors to pay the fee; or if the deceased held enough money in their bank accounts or investments to pay the fee, that the financial institutions will be able to make arrangements to settle it directly with the courts (in a scheme similar to the existing Inheritance Tax Direct Payments scheme). It may even be possible to arrange life insurance for the purposes of settling the fee.
A further major concern of the legal profession is that the new fees may encourage people to seek to avoid the probate process altogether. This could leave some people, particularly the elderly, vulnerable to pressures to transfer assets before they die or people may seek other ways to avoid the probate process and in turn avoid reporting the estate to HM Revenue and Customs.