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Another stealth tax?

Another stealth tax? - Changing Fees for Grants of Probate (with effect from May 2017)

The Government has recently announced its proposal to alter the fee structure relating to applications for Grants of Probate from May.

Whilst the changes may mean that some estates will benefit, in many cases the fee payable to obtain a Grant of Probate will increase dramatically.  The Government announced in February that it has decided to proceed with the following principal changes:-

  • That the level for Grants of Probate for estates where no fee would be payable to will be increased from £5,000 to £50,000; and
  • That fees will be increased in respect of all other estates at different levels depending on the value of the estate passing under the Grant.  In some cases, the amount of fee payable could increase by nearly £20,000.

Probate registries across the country are therefore expecting a rush on applications being made before the increases take effect.

The new fees bandings will mean that, according to Government figures, 92% of estates would pay a fee of £1,000 or less, 98% would pay a fee of £4,000 or less, and less than 2% of estates would pay a fee of between £8,000 and £20,000.  Whilst this may well be the case, the simple fact is that such proposed changes will mean a significant increase from the current fees charged for much of the population. 

The Government have stated that it is important that England and Wales retains a properly funded Courts and Tribunal Service, and makes the point that close to £1 billion is currently being invested in this system each year.  However, many of the changes imposed are in spite of much concern and many dissenting voices in the legal profession. 

The work involved and cost to the Probate Service to provide a Grant of Probate is broadly the same regardless of the value of the estate, but this seems to have been disregarded.  So too have concerns about how the fee might be payable.  There can be many instances where, whilst an estate may be of significant value, much of that value may be in iliquid assets (such as buildings or chattels) that may be difficult or take some time to sell.  There will be occasions when executors or beneficiaries will have to look to fund the fee, either out of their own resources or via some form of borrowing.  Loans to pay inheritance tax have become harder and harder to obtain in recent years, and where they are available, can often come subject to very high fees and/or interest rates.    Hopefully, the meetings that the Ministry of Justice has held with both the British Bankers Association and the Building Societies Association will result in clearer information to help executors and resolve inconsistencies regarding funding which is available.   However, it remains to be seen what impact this will have in practice. 

These proposals are expected to come into force from May 2017 (based on the date of application rather than date of death).  With careful planning, both in terms of the contents of your Will and the structure of your estate, it may be possible to mitigate and plan for these fees moving forwards.  Please feel free to contact one of the other members of the Private Client Team on 01274 377668 , if you would like to discuss these matters further, or if you would like any assistance in handling such an application or any matters in respect of a deceased’s estate. 

The team is fully experienced in all matters relating to Wills and Estate Planning, as well as Powers of Attorney, Court of Protection, Trust and Tax Planning and Succession Planning generally. 

About the Author

John Feaster

Partner

John Feaster, LLB, CTA, TEP is taxation partner. He qualified as a tax lawyer with Eversheds LLP specialising…

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