The Government first threatened a big hike in Probate Court fees back in June 2016. The original fee proposals were then put on hold following the announcement of a snap general election. Now they are back on the table and the House of Lords reluctantly voted to approve the plans on the 18th of December 2018.
The court fees in question are those that you pay to the Probate Registry when you apply for a Grant of Probate. Probate application fees are currently a flat fee of either £155 when you ask us to apply plus 50p for each copy of the Probate that you need, or £215 if you apply for Probate personally.
The new proposed Probate Court fees are as follows: –
For an estate with a value of:
Less than £50,000 – the new proposed Probate fee will be zero. Good news for some and the obvious Government headline but….
Between £50,000 and- £300,000 – it will be £250
Between £300,000 and £500,000 – £750
Between £500,000 and £1 million – £2,500
Between £1 million and £1.6 million – £4,000
Between £1.6 million and £2 million – £5,000 and
Over £2 million – the Probate Registry fee will be £6,000
Although these fees are significantly less than those proposed in 2016 – the fee originally proposed for estates over £2 million was a staggering £20,000, the proposed fees still represent a massive increase compared to those currently in place. The current fees for applying for probate cover the cost of administering the service. If the new fees are introduced, executors of estates over £2 million will be required to pay over 30 times the actual cost of the service, in addition to any existing inheritance tax liability. Double taxation?
Two 2017 consultations roundly criticized the fee proposals. They have been generally referred to as a “stealth tax” by the legal community, yet despite this the Government is determined to push them through, why? Well the whole courts service is in dire need of financial assistance. In 2016/17, the courts service had running costs of £1.6bn but recovered less than half of this in fees – £740m, of which £49m was fee income from the Probate Service issuing over 250,000 grants. The Government estimates that the proposed fee hike will generate over £146 million in additional fee income in 2019/20.
This income generating solution, whilst effective, is arguably blatantly unjust. In their consultation in 2017 The Joint Committee on Statutory Instruments pointed out that a person can choose whether to litigate but applying for probate is an unavoidable administrative process. The Law Society have made the similar point that it seems unfair and discriminatory to expect the bereaved to fund or subsidise other courts. The Bar Council agrees that the bereaved should not be asked to pay a tax to cover the shortfall of other courts and has expressed more general concerns about the shift away from the state and the general taxpayer funding access to the justice system.
With the introduction of these new fees comes the potential for additional strain for executors and beneficiaries. A large estate may consist largely of valuable property, and so executors might not necessarily be in possession of liquid assets to pay fees at the time of applying for a grant of Probate. While some banks may release funds for fees there is no guarantee of this, and the financial cost of short-term loans is excessive. The Ministry of Justice has offered assurances that in circumstances like this the Probate Service will provide limited access to the assets of the estate, or the Lord Chancellor will have the power to remit fees where it can be shown that those applying will be subject to undue financial or other hardship to pay them, but of course this is likely to involve the navigation of more applications and paperwork by bereaved people at an already difficult time.
In November last year junior Justice Minister Lucy Frazer said that the Government will publish a guidance document before the new fees come into force to help applicants choose the option to pay which suits their circumstances.
Before the fees are put in place they need to be approved by both houses, and there is currently no date for when the House of Commons is due to assess the proposals. We will be monitoring developments closely.
Probate is an important administrative process that brings some safeguards when properly executed. In many cases the process is very straightforward, but often it is not and there are plenty of pitfalls to avoid especially where inheritance tax is involved. Will the rise in Probate Court fees increasingly lead clients to look to arrange their affairs to avoid the need for a Probate application at all? We shall see……