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Probate fees set to soar

04 Apr 2016

The Ministry of Justice (MoJ) has proposed to increase fees for probate applications in England and Wales – by over 12,000% for the largest estates. The move is proposed to raise an additional £250 million to principally boost the economy, and, to assist courts and tribunals in moving from a paper-based system to an online system.

The flat-fee current system for applications for probate, set in 2014, is either £155 if made by a solicitor or £215 if made by an individual (to account for the extra work required in an individual’s application). Before the current fee-structure was introduced, fees for solicitors making an application for probate were only £45 (and so were increased by over 300%).

The MoJ are now proposing the introduction of a fee-structure proportionate to, and rising in line with, the value of an estate for all applications (i.e. if made by a solicitor or an individual). There is currently no fee for probate applications in net estates amounting to under £5,000 and this exemption will be increased for estates up to the value of £50,000 which means that the bulk of all estates (57%) will have no fee to pay at all.

However, the proposed fee for probate applications in net estates in England and Wales over £50,000 (before Inheritance Tax (IHT) is paid) will be:

  • £300 for estates with a net value of £50,000 – £300,000 (27% of all estates);
  • £1,000 for estates with a net value of £300,000 – £500,000 (10% of all estates);
  • £4,000 for estates with a net value of £500,000 – £1 million (5% of all estates);
  • £8,000 for estates with a net value of £1 million – £1.6 million (1% of all estates);
  • £12,000 for estates with a net value of £1.6 million – £2 million (0.2% of all estates); and
  • £20,000 for estates with a net value of £2 million plus (0.4% of all estates).

 

It is estimated therefore that 84% of estates would be exempt or pay £300 and 94% of estates would pay £1,000 or less (for probate applications).

The proposed changes will however have significant adverse consequences for those larger estates where main assets are immovable and cannot be sold quickly to release the requisite funds to make the application for probate. This could also have ramifications for deadlines in IHT-paying estates. Ultimately, the cost of making an application for probate, if the MoJ’s proposals are implemented, would most probably add an extra burden to the process of administering an estate.

For further information or if we can help with any of the issues set out above, please contact Alice Clewes, Partner in our Private Capital team, on 0191 232 8345 or email: Alice.Clewes@hay-kilner.co.uk