Proposed increase of Probate application fees from April 2019 - a stealth tax?
Posted on 15th March 2019 at 15:35
In England and Wales probate application fees are set to increase from April 2019.
The fees are payable to the probate registry in order that they will issue a grant of representation which is required to realise assets in an estate.
The fees are currently either £155 through a solicitor or £215 if made personally. However, under the proposed increase, the fee will be based on the value of the estate as shown below.
Estates worth less than £50,000 will pay nothing, meaning estates worth between £5,000 and £50,000 will save a maximum of £215 compared to the current system.
•Estates worth from £50,000 up to £300,000 will pay £250, a rise of £35.
•Estates worth from £300,000 up to £500,000 will pay £750, a rise of £535.
•Estates worth from £500,000 up to £1 million will pay £2,500, a rise of £2,285.
•Estates worth from £1 million up to £1.6 million will pay £4,000, a rise of £3,785.
•Estates worth from £1.6 million up to £2 million will pay £5,000, a rise of £4,785.
•Estates worth more than £2 million will pay £6,000, a rise of £5,785.
The proposed increased in fees have not yet been approved by Parliament and a parliamentary committee have attacked the governments plan, questioning whether the Lord Chancellor is acting beyond his powers.
In a written statement to Parliament, the Parliamentary Under-Secretary for the Ministry of Justice Lucy Frazer MP suggested that the new banded fee model represents ‘a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system’.
The fee is proposed help plug a shortfall in the cost of the courts service, not just the probate registry. The courts in England and Wales currently raise about £740million in fees, and cost £1.6 billion to administer.
The Under-Secretary is also confident the ‘fees will never be unaffordable’ and states that the fees are recoverable from the estate and the executors have several options to fund it. Whilst this is the case, some executors will have to borrow the funds in the first instance and will cause some extreme financial hardship.
Some are calling the proposed increase a back door or stealth tax given that the administration required by the probate registry does not differ if the estate is worth £50,000 or £2 million and so a flat fee is fairer.
The proposed rise could see individuals taking risky measures to when arranging their affairs in order to try and avoid or reduce these substantial fees after their death such as transferring their home into their children’s names without considering the consequences of doing so.
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