Probate fees set to increase following reform

Despite the overwhelming negative response to its consultation in early 2016, the government has decided to proceed with its proposals to reform the fees for grants of probate or letters of administration.

Although the threshold below which no fee is payable for applications for grants of probate will be increased from £5,000 to £50,000, the increases where fees are payable are high. In addition, the fees will be implemented on a banded structure, increasing in line with estate values as set out in Table 1 of the consultation.

The government published a consultation on proposals to reform fees for grants of probate in February 2016; responses had to be made by 1 April 2016 and it was stated specifically there was no possibility to extend the date.

The response to the consultation was published on 24 February 2017, nearly a year later.

The consultation sought views on the following proposals:

  • introducing a fee structure for applications for grants of probate (or letters of administration) based on the value of the estate
  • increasing the threshold below which no fee is payable for applications for grants of probate from £5,000 to £50,000, and
  • removing these applications from the general fee remissions (‘help with fees’) scheme.

ICAEW responded to the consultation in ICAEW REP 61/16 commenting that charging fees as a percentage of the estate is akin to a tax, it is not representative of the cost of the service and such a change should be made with proper parliamentary scrutiny and not by statutory instrument.

Three of the specific questions asked and the responses are as below:

Question 1: Do you agree that it would be fairer to charge a fee that is proportionate to the value of the estate compared with charging a fixed fee for all applications for a grant of probate?

There were 829 responses to this question, 695 disagreed the proposal and 63 agreed.

Question 2: Do you agree with the proposal to increase the threshold above which the fee is payable from £5,000 to £50,000?

There were 817 responses to this question of which 568 respondents disagreed and 236 agreed.

Question 3: Do you agree with the government’s proposals to charge fees for probate applications as set out in Table 1?

This question received 831 responses of which 810 disagreed and 13 agreed.

The level of fees is quite eye watering, a fee of £8,000 for an estate of £1,000,001 which, once the residential nil rate band is fully in place could attract an inheritance tax liability of 40 pence. The top fee is £20,000 for an estate in excess of £2m.

As part of the changes there will no longer be any help with the fees and it is suggested that they could be paid by the executor out of their personal assets for later reimbursement! Who will choose to be an executor if that is expected of them.

The £4,000 fee for estates worth between £500,001 and £1m is likened in the response to typical funeral fees of £4,000 for the deceased. The difference is that funeral directors generally wait until probate is obtained before chasing their fees whereas the probate fee has to be found in order to obtain probate. Is the suggestion that the executors should cancel the funeral and pay the probate fees instead?