Late on Monday evening, the Ministry of Justice proposed a new Probate Court fee increase.You may remember that this was proposed in 2017 but the idea was temporarily shelved when the 2017 General Election was called.
The current Probate Court fee is £155.00 for solicitor applications and £215.00 for personal applications regardless of how much the estate is worth.It is the same fee for a Grant of Probate (if someone dies with a valid Will) and for a Grant of Letters of Administration (if someone dies without a valid Will in place).
The new proposed Probate Court fee increase is as follows: –
Value of estate (before inheritance tax)
Up to £50,000 or exempt from requiring a grant of probate
£50,000 – £300,000
£300,000 – £500,000
£500,000 – £1m
£1m – £1.6m
£1.6m – £2m
Every person has the first £325,000.00 (nil rate band) of their estate free of Inheritance Tax and some people may qualify for an additional £125,000.00 (residence nil rate band in 2018/2019) free of Inheritance Tax.The value of the estate over the nil rate bands is chargeable to Inheritance Tax at 40% provided there are no exemptions or reliefs available.
Inheritance Tax has to be paid by the Executors before a Grant can be obtained either wholly upfront or just the first instalment if the assets in the estate qualify.If the estate has cash, then this can be utilised to pay the tax otherwise, the Executors have to find the money themselves.The proposed Probate Court fee increase will also need to be paid by the Executors in order to obtain the Grant.Currently, the Executors have to finance the Probate Court fee from their own funds.The new structure will place a huge financial burden on the Executors who may have to obtain loans to fund the fee and in the background, they may have had to pay Inheritance Tax and the funeral account too.
The Probate Registry’s workload does not increase in accordance with the value of the estate.It remains exactly the same.It is akin to an issue fee in normal court proceedings.The Probate Court fee increase has been described as a stealth tax because it increases in line with the value of the estate and it is grossly unfair.It will affect the estates that fall into the middle categories the most. Many of these estates will not only be paying Inheritance Tax but they will also be paying an increased Probate Court fee.
The Ministry of Justice has attempted to justify the fee hike by explaining that it is needed to fund a shortfall in the funding of the rest of the court service.Perhaps this could better be achieved by increasing court fees across the board by a much smaller amount.It is difficult when a loved one dies and it should not be the case that family members are burdened with further financial worries in an attempt to financially prop up the rest of the court service.