Inheritance tax, Part 2?


In February the government published their response to a public consultation regarding the proposal to change the fee structure for applications for probate.

Presently, applications for probate cost £215, or £155 if applied through a solicitor. The proposed new fee structure will introduce a sliding scale as shown in the table below:

Value of estate (before inheritance tax) Proposed Fee

Up to £50,000 or exempt from requiring a grant of probate £0
Exceeds £50,000 but does not exceed £300,000 £300
Exceeds £300,000 but does not exceed £500,000 £1,000
Exceeds £500,000 but does not exceed £1m £4,000
Exceeds £1m but does not exceed £1.6m £8,000
Exceeds £1.6m but does not exceed £2m £12,000
Above £2m £20,000

The government have admitted that this change is directly aimed at generating income, arguing that Her Majesty’s Courts and Tribunal Service cost in excess of £1billion per year and that this change would bring in £300million in additional income.
The proposal was issued to around 900 legal entities for consultation, which was met with an overwhelmingly negative response. The main points of objection can be summarised as:

1. The new proposed lower threshold of £50,000 is too high

Although most would agree that a sliding scale of fees based on estate size is a positive and progressive reform, it is judged that the largest estates will be subsidising the smaller estates whereas an adjusted scale with less radical changes would be fairer to all.

2. The fee increase places unnecessary additional pressure on executors

Traditionally the existing fee is met by the executors who would reclaim this from the estate once Probate has been granted. Asking the executor to pay probate court fee which amounts to £1000s is a very different matter from asking them to pay £155.

There are no exemptions to the application of the new fees, meaning that Estates which pass wholly to a spouse to a charity will still be subject to the new inflated probate court fees regardless of their exemption to Inheritance Tax.

3. The new fees are not proportionate with the service provided by the Probate Service

Despite the huge hike in the proposed fee increases for larger estates, the work required to administer the probate applications remains unchanged, leading many to argue that a sliding scale is disproportionate.

4. The new fees risk mismanagement of estates to avoid the proposed fees

With the potential for huge increases in fees, there is concern that people will be looking to place assets in trust in an effort to avoid the increased probate fees. This could mean that people forego proper estate planning and do not seek proper advice.

Naturally, my colleagues and I at Hine will be monitoring the developments of this proposal very carefully. However, I personally feel that the concerns that were raised during consultation are very justified, and that if progressed these fees will place an additional, unnecessary pressure on executors during what is already an incredibly difficult time.

Lauren Marlow, Solicitor.

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