New probate fees to affect many estates

The government has revived plans to raise probate fees in England and Wales.

A new, banded structure for probate fees in England and Wales is to be introduced, according to a written statement issued after the 2018 Budget.

The announcement comes despite the 2018 Budget barely mentioning inheritance tax (IHT). There was widespread speculation about reforms to IHT after the Chancellor commissioned the Office of Tax Simplification (OTS) to review the tax in January 2018. However, with the full findings of the OTS review yet to be published, the only change to IHT announced in October was a small adjustment to the legislation for the residence nil rate band – this being such a complex piece of legislation, it had been wrongly drafted.

New fee structure

The government made a very similar proposal on probate fees in March 2017, and at the time it was heavily criticised as being a stealth tax rather than a simple fee adjustment. The argument was never resolved and the issue was eventually lost in the legislative process around the last General Election.

Since then, the government has taken on board some of the original criticism and cut the fees they were proposing, particularly for larger estates:

Value of estate Old Proposal New Legislation
Up to £50,000 Nil Nil
£50,001 – £300,000 £300 £250
£300,001 – £500,000 £1,000 £750
£500,001 – £1,000,000 £4,000 £2,500
£1,000,000 – £1,600,000 £8,000 £4,000
£1,600,001 – £2,000,000 £12,000 £5,000
Over £2,000,000 £20,000 £6,000

 

The current fees are £215 for individual applications and £155 via a solicitor, with nothing payable if the estate value is up to £5,000. Under the new banding, there is a maximum effective charge for probate of 0.5% of the estate, which is triggered at £50,000 (a £250 fee) and £500,000 (a £2,500 fee).

The new fees are scheduled to come into effect 21 days after the legislation is passed, and there is very little that can be done to mitigate the impact. They are payable even if the estate passes with no IHT liability, as is usually the case on the first death of a married couple or civil partners, or if the value of the estate is covered by the available nil rate and residence nil rate bands.

 

 

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