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New probate fees will cost some estates £6,000

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20th November 2018

New probate fees will cost some estates £6,000

The government is pushing ahead with plans to raise probate fees by up to 3,770%. The proposals will see estates worth £2m or more pay £6,000 in probate fees, up from £155 currently. However, the increase is a reduction on the government’s original proposals, which would have seen a bill of £20,000 for the largest estates. Estates with a value of between £1m and £1.6m will have to pay £4,000. The government estimates the move would raise £185m a year by 2022/23, to be put towards funding the national courts and tribunal services.

Ministers took the decision to increase probate fees despite the protests of more than 800 charities, trade bodies and businesses. Of the 831 organisations that responded to a consultation on the fee changes - including the Law Society - 810 disagreed with the proposals, branding them “excessive” and “unjustified.” 

The Law Society said: "It is unfair and discriminatory to expect the bereaved to subsidise other parts of the court and tribunal services." Meanwhile, charities said they fear that the dramatic rise could reduce legacy donations to good causes. They say that the reforms will have an “excessive” and “unjustified” impact on funds given to charities via legacy donations.

Presenting a number of legislative reforms to probate fees in Parliament, Justice Under Secretary Lucy Frazer affirmed that there would be a shift from the current, fixed probate fee to a new, banded structure. 

Fees for the court’s administration of wills will now be charged on a sliding scale and may amount to as much as 0.5% of the value of the estate. 

The changes mean that fees which were previously fixed at £255 – or £155 for grants obtained by solicitors – will now be legally capped at a maximum of £6,000.

The new legislation also increases the value threshold for estates charged probate fees from £5,000 to £50,000, meaning that 30,000 more estates will now no longer be charged any fee at all.

Charities “deeply concerned” about fee increase’s impact 

Charities have warned that a rise in probate fees will cost them at least £10m a year as the increased charges take up larger parts of estates and thus mean smaller donations. Matthew Lagden, of the Institute of Legacy Management, said the losses come at a time when many charities are struggling to meet growing demand for their services.

Charitable bequests currently generate almost £3bn a year for the UK’s charity sector.

Mr Lagden said he was “deeply concerned” by the reforms, stating that “The new fees would significantly reduce income for charities reliant on legacy gifts . . . at a time when many charities are struggling to meet increasing demand for their services.”

He further pointed out that “the government’s own impact assessment acknowledges that the current fees cover the average costs of making a grant of probate, so we are clear that this is a stealth tax, which will be borne in part by charities.”

The Law Society echoed the charitable sector’s complaints that the new measures equate to a stealth tax, with the society’s wills and equity committee leader terming the charges “inherently unfair.”

Ian Bond, chair of the Law Society's Wills and Equity Committee, particularly faulted the new sliding scale approach to probate fees, pointing out that “The cost to the courts for providing a grant of probate does not change whether the size of the estate is £10,000 or £1m.” 

Government defends “fair and progressive” change

The government for its part has defended the legislative reforms, underlining that 80% of estates will be charged no more than £750.

Speaking in Parliament, Lucy Frazer said that the new banded model represented “a fair and more progressive way to pay for probate services.”

She added that the charges “reflect[ed]” the Ministry of Justice’s “commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system.”

The government is currently working to update the HM Courts & Tribunals Service, pledging £700m towards updating and modernising their services between 2015 and 2020.

It therefore sees the increase in probate fee raises as a “critical contribution” to the updates, which will assist in “cutting the deficit and reducing the burden on the taxpayer of running the courts and tribunals” by generating hundreds of millions from wills.

 

Wills, Trusts and Probate

Wills, Trusts and Probate (Tax and estate planning, Lasting Powers of Attorney, Trust administration, wills disputes, Financial planning services). For advice on issues relating to wills, trusts, probate and tax and estate planning, contact our specialist team, call us on 03456 381381 or email enquiries@ibblaw.co.uk

 

 

 

 

Needs Dev Jacqueline Almond

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