Proposed changes to the rules around probate in England and Wales were due to come into effect on the 1st of April 2019 but have been delayed due to opposition and Brexit matters taking priority. A Ministry of Justice spokesperson has said that the reforms will come into force ‘as soon as possible’, though the proposal has been deemed controversial by many, with Labour indicating it will object to the revised fee scheme, giving the House of Commons the chance to vote. Other opponents include the Liberal Democrats and two Lords committees, who dubbed the changes as a ‘stealth tax’. Following the suggested changes, probate fees would be charged on a sliding scale instead of a flat rate, with estates under £50,000 being exempt but those in higher bands seeing increases of up to 3000%.
Probate involves the administration of a person’s estate after their death, such as: finances and savings, property, funeral expenses and arrangements, insurance policies, inheritance tax, and any other assets and liabilities. Dealing with these legal issues generally requires the help of a solicitor and probate fees may apply depending on the size and value of the estate.
According to the updated probate rules, the new fees would apply as follows:
- Estates worth less than £50,000 will not be charged a probate fee
- Estates worth £50,000 up to £300,000 will be charged a fee of £250
- Estates worth £300,000 up to £500,000 will be charged a fee of £750
- Estates worth £500,000 up to £1 million will be charged a fee of £2,500
- Estates worth £1 million up to £1.6 million will be charged a fee of £4,000
- Estates worth £1.6 million up to £2 million will be charged a fee of £5,000
- Estates worth more than £2 million will be charged a fee of £6,000
The most significant changes to probate fees have been applied to estates over the value of £500,000 (an increase of £2,285), and continue to rise in relation to estate values up to a maximum fee of £6,000 for those worth over £2 million. Previously, a flat fee of £215 was applicable regardless of the value of an estate (or £155 if you use a solicitor). Under the new model, fees will be the same whether you use a solicitor or not.
The changes have been accused of being a ‘stealth tax’ disguised as a fee in order to avoid a parliamentary debate or vote, but the Treasury claims the new model will be classified as a ‘tax on capital’ instead of payment for a service. A Ministry of Justice spokesperson claimed: “The income raised from the increased fees will go towards funding a more efficient and effective courts and tribunals system.”
A Ministry of Justice spokesperson defended the steep rise in fees for those with estates worth over £500,000 by saying: “Our system will see thousands of bereaved families paying no probate fees at all – protecting an additional 25,000 estates each year. Fees are vital to the effective running of our courts and tribunals, ensuring access to justice and protecting vulnerable victims.”
Lucy Frazer MP, Parliamentary Under-Secretary for the Ministry of Justice, also gave a statement explaining the changes:
“This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system.
“We are also confident these fees will never be unaffordable. The cost of the fee is recoverable from the estate and executors have several options to fund it. Moreover, the Lord Chancellor retains a power to remit a fee if he considers there are exceptional circumstances.”
At present, there is no set date for when the changes might come into effect, and the proposal may be put to a vote if objections are formally lodged against it. So, if you are in a position where you need to apply for probate arrangements, it may be better to get things in motion sooner than later. To speak to an experienced member of our wills & probate team, get in touch at www.franceslindsay.co.uk.probate, wills