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Act now to avoid stealth tax on probate fees, say solicitors

Cherry Reynard
Written By:
Cherry Reynard
Posted:
Updated:
24/01/2019

Those needing probate for a wealthy relative or friend are being urged to apply before the end of March to avoid significant fee increases for large estates

Law firm Clarke Willmott LLP said a new banded fee structure is to come into effect from the new tax year, which means estates valued at more than £2m will pay almost £6,000 more, a rise of 3,771% on current charges. The new fee structure is likely to hit 230,000 families a year.

At present probate court fees are a flat £155 on all estates over £5,000.

Those estates worth between £1.6m and £2m will pay £5,000 and those between £1m and £1.6m £4,000. This falls to £2,500 for estates worth between £500,000 and £1m. Those estates valued at less than £50,000 will pay nothing.

Paul Davies, head of Clarke Willmott’s private capital team, said: “People who are coming to terms with a bereavement may understandably put off dealing with probate until things have settled down and they are more able to attend to such necessities.

“However, with the new banded fee structure coming into force in just a few weeks’ time, a delay in applying for probate could mean a staggering increase of almost £6,000 in extra probate court fees. So, it’s important not to delay.

“Although there is no time limit on the probate application itself – inheritance tax should be paid six months from the end of the month of death, and payment must be made before probate courts will issue a grant of probate.”

Davies said that the charge will particularly hit those in London and the South East, where property rises have tipped them into higher fee brackets: “It could hit those people who are asset rich but cash poor who may find it hard to cover the cost of the probate registry charge, which is payable on application for the grant before access can be obtained to the estate’s assets.”

The change in levy has been branded a ‘stealth tax’ and a ‘misuse of power’ by the Lords Legislation Scrutiny Committee because, whether the estate is worth £50,000 or £50 million, there is no difference in the amount of administration work by the Probate Registry.

Probate is the process of obtaining the legal right to manage a deceased person’s estate which includes property, money and possessions. A grant of probate or letters of administration is required in many estates to prove that the personal representatives are entitled to deal with the estate – to collect in the deceased’s assets and distribute the estate to its beneficiaries.