10 April 2017
Probate registries in England and Wales will shortly be switching from charging a fixed fee (in most cases £155 for applications made by a solicitor or accountant and £215 for personal applications) to a banded system with fees based on the value of the estate passing under the grant of probate. The good news is that estates with a value of up to £50,000 will not be subject to a fee at all (there was previously an exemption for estates worth up to £5,000). The bad news is that fees will be higher for all values in excess of £50,000, and for some the increase will be substantial. For estates worth in excess of £500,000 the new fee will be £4,000; for those over £1m the fee will be £8,000; for those over £1.6m it will be £12,000; and for those over £2m it will be £20,000.
The new fee structure is essentially a tax – intended to help fund the wider courts system – and the way in which it will work shares a number of characteristics with Inheritance Tax. What it won’t share, however, are the exemptions. The fee will still be payable if the assets subject to the grant are to pass wholly to a surviving spouse; it will also be payable if some or all of the assets are to pass to charity.
The impact on charitable legacies will be twofold; in the longer term there is a distinct possibility that, in the knowledge that these additional fees are going to have to be paid, those drawing up or amending their Wills will choose to reduce charitable bequests or remove them altogether. More immediately, where a charity stands to benefit from a share (possibly all) of the residue of an individual’s estate, these fees will be a direct deduction from that residue with a direct impact on the charitable beneficiary.
There are planning options for individuals looking to reduce the impact of these new fees and of course charities may want to encourage lifetime giving as an alternative that is not subject to probate fees. However, it is likely that the majority of substantial gifts will continue to be made on death. Perhaps the best option for the sector will be to lobby for an exemption from the fees proportionate to any charitable legacies.
Did you know that as accountants, we can now provide a full estate administration service including the application for probate? For more information contact me (London) or your local licensed probate adviser:
- Graham Boar (Letchworth)
- Nick Edwards (Kent)
- Amanda Millet (York)
