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probate  •  Probate and Inheritance Tax

Probate fees set for sharp increase – Consultation Update

By Lesley Stalker on 10 March, 2016

The government has initiated a new consultation process in order to review the way in which probate fees are calculated, which will run until 1st April 2016. In response to criticism about the proposals, the government is arguing that these changes are necessary in order to subsidise the cost of running the courts system and will contribute an additional £1.1bn.

Probate fees increase could mean costs of £4,000

It is proposed that there will be a significant increase to the fees payable in order to obtain grant of probate, which will impact estates worth £300,000 or more. Currently, the fees for obtaining grant of probate are £150 for an estate worth over £5,000. Should these proposals go ahead, which seems likely, the cost of obtaining probate will range from £300 for estates with a value of up to £300,000 to £20,000 for estates valued above £2m. For Londoners, given that it is not uncommon for estates to be worth up to £1m due to higher house prices, this will potentially result in average fees of £4,000.

As reported in the FT, below is a table of the costs proposed, which rise in accordance with the value of an estate.

Value of estate (pre­IHT) Proportion of all estates Proposed fee 
Up to £50,000 57% £0 
£50,000 — £300,000 27% £300 
£300,000 — £500,000 10% £1,000 
£500,000 — £1m 5% £4,000 
£1m — £1.6m 1% £8,000 
£1.6m — £2m 0.2% £12,000 
Above £2m 0.4% £20,000 

Source: Ministry of Justice

Double payments may be due 

There are some caveats to be aware of too; depending on the way in which assets are owned, probate fees are already payable up to twice, and this will become more onerous following the proposed increases. For example, in the case of assets held by a husband and inherited by his wife on his death, probate fees are payable by both spouses on death, based on the value of the same assets inherited. On an estate valued between £500,000 and £1m, the total probate fees ultimately payable will be £8,000. i.e. a £4,000 fee will be due to obtain grant of probate on the first death and a further £4,000 on the second death.

In terms of financial planning, there is very little to be done apart from being aware of the increased costs and applying for grant of probate as soon as possible where it is feasible to do so on any estates currently in administration. Otherwise it is simply a case of being aware of the increased fees and ensuring that sufficient funds are available before probate is granted to enable payment to be made.

RJP is able to assist clients in completing and filing inheritance tax accounts and obtaining grant of probate. For more information please contact Lesley Stalker by emailing las@rjp.co.uk.

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