Probate is often a necessary step for dealing with the estate of someone who has passed away. To begin the probate process, the personal representatives of the estate (i.e. the executors or administrators) will gather the required information and apply for a grant of probate. The application is made to the appropriate court or probate registry and involves paying a fee for the grant to be issued.
Changes to theses fees have been in prospect since the end of 2018, when the Non-Contentious Probate (Fees) Order 2018 was introduced. Whilst the Order was due to come into force in April 2019, it is now clear that this will no longer be the case.
The Order is set to take effect 21 days after it has been finally approved by Parliament, and, as the matter has not been listed in Parliament’s agenda for the week following their Easter recess, it now means the earliest opportunity for the change will be towards the end of May.
This is good news for estates seeking a grant of probate in the meantime, as the new scale of probate fees could make a dramatic difference to the amount an estate would have to pay.
Most estates will require a grant of probate, and therefore most estates will have to pay the fees to obtain one. It is only in relatively rare circumstances, such as low-value estates, or estates in which the majority of assets pass by survivorship to a joint owner, that a grant of probate will not be required. Even then, some banks, building societies or other institutions, may insist that a grant of probate is obtained.
How different is the new probate fee scale?
Currently, where an estate is worth £5,000 or more, the fees for a grant of probate are fixed at £215 for applications made personally (or £155 for applications made through a solicitor).
The new fees will vary more widely, based upon the estate’s value. Estates valued at £50,000 or less will no longer attract a fee but for estates worth more than this sum the fees promise to be much greater.
For estates worth:
- over £50,000 but less than £300,000, the fee will be £250.
- over £300,000 but less than £500,000, the fee will be £750.
- over £500,000 but less than £1,000,000, the fee will be £2,500.
- over £1,000,000 but less than £1,600,000, the fee will be £4,000.
- over £1,600,000 but less than £2,000,000, the fee will be £5,000.
- over £2,000,000, the fee will be £6,000 fee.
What could this mean for executors and administrators?
The proposals have been controversial given the major increases in fees which more valuable estates will face. The work a court or probate registry must do to issue a grant of probate does not change with the value of an estate, yet the fee could be anywhere from nil to £6,000.
The probate fee is an expense of administering the estate and is unrelated to inheritance tax. This means inheritance tax-saving methods such as using a spouse exemption, or your nil rate band, are unavailable to reduce the probate fees which an estate must pay.
Actually paying the fee may also prove problematic for executors and administrators. Until the grant of probate has been issued, they are not legally entitled to sell or deal with estate assets. A wealthy estate which has its value tied up in property or other inaccessible assets may lead to difficulties in finding the ready cash to pay the probate fee, especially if it amounts several thousands of pounds.
What happens now?
It remains uncertain when the new probate fees will take effect. Theoretically, when the approval motion takes place, MPs could object to the Order and trigger a full debate on its implementation. However, at this stage, the introduction of the new probate fees looks to be a question of ‘when’ not ‘if’.
Indeed, North Yorkshire MPs Julian Sturdy and Kevin Hollinrake are supporting our principal solicitor Rachel Roche’s attempt to highlight serious concerns over the Government’s decision to increase probate fees to create what has been described as a “tax on grieving families.” You can read more about this here.
Changes to the probate form
HMRC has also introduced changes to the probate summary form. This form is used when applying for a grant of probate.
The amendment has changed the ‘Statement of Truth’ which people applying for probate must complete. It replaces the old oath that featured on the form.
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