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Implications of proposed increase in probate fees for high value estates

Implications of proposed increase in probate fees for high value estates


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The Ministry of Justice is proposing an increase in probate fees charged to higher value estates.  Currently, the fee is the same regardless of the size of the estate (£215 for an individual applying direct, and £155 if applying through a solicitor). If plans become a reality, fees could increase to as much as over 100 times that for estates worth over £2 million. 
The Meade King view from our Tax and Estate Planning team
The probate fee hike proposed by the Ministry of Justice is likely to be unpopular, as it appears to be a further “death tax” on estates, especially given the admission that the current fee structure covers the costs of the probate service.  The fact that the court service generally desperately requires funding is going to be of little comfort to those whose probate fees under the proposal would be raised from around £200 to several thousand pounds and in the worst case, for estates worth over £2m, £20,000. 
 
Although some may have little sympathy with those who have amassed enough wealth for their estate to qualify for this greatly increased fee, it should be borne in mind that rising house prices alone in Bristol mean that many more estates are now subject to inheritance tax (currently 40% over £325,000 for an individual) and now potentially this new fee. The increased fees bear no relation to the work undertaken by the probate registry: the work is the same no matter the value of the estate. It should also be considered that estates where assets are simply passing between spouses on death, although exempt from inheritance tax, could now potentially have  a hefty probate fee to pay.
 
On the upside, according to the Ministry of Justice, 94% of estates will be paying £1000 or less, although in places like Bristol and London where house prices are strong and rising, this percentage is going to be lower.  If these changes are brought in, those affected will need to ensure they have in place effective “tax planning” considerations, to avoid being at the higher end of the proposed fee structure.
To read an article reporting on this in The Law Gazette, please click here.
If you would like to speak to a member of our Tax and Estate Planning team, please call 0117 926 4121