It has been announced that the government has revisited it’s plans to increase probate fees. First announced in 2017 but then scrapped prior to the May 2017 general election, the plans were to increase the current £215 probate application fee to a fee scale based on the value of a person’s estate.
The proposals this time are similar and although less arduous than the rise previously announced, at a maximum of £6,000 for estates worth more than £2million, these are not insignificant increases. Where access to bank accounts is frozen on death, having the funds available to meet such large fees before probate is granted could prove problematic to executors and those administering estates.
We understand the plans are to introduce the new fee structure in April 2019 so no doubt we will see the same rush, to get estates through to probate prior to the change, as we did last time. Again, there is a fee scale which has been outlined as follows:
Up to £50,000 £0
£50,000 – £300,000 £250
£300,000 – £500,000 £750
£500,000 – £1m £2,500
£1m – £1.6m £4,000
£1.6m – £2m £5,000
Over £2m £6,000
Please note the estate value is before any inheritance tax and before any reliefs such as Agricultural Property Relief and Business Property Relief. This could mean estates that are not subject to Inheritance Tax will still be caught by these fees.
As with the proposed increases in 2017, the new fee scales do not bear any relation to the actual costs of the service with many professionals simply calling it another tax. Turning to planning, the focus is likely to shift from tax-efficient will planning to more emphasis on lifetime giving and using trusts for succession planning. The aim being to reduce death estates to a value where the probate fees due would be at the lower end of the scale. With any succession planning it is vital to ensure you get good advice from your tax advisor prior to implementing any changes as there may be tax consequences to be overcome.
Contact our tax team on 01228 711888 for an informal, no obligation chat.
Posted: November 9th, 2018