New Probate Fees

12 February 2019

It is not uncommon to focus on an estate's charge to inheritance tax (IHT) in the event of a death, if applicable. When an estate is finalised, and legal control is sought, probate will be required from the Probate office and the fixed fee for this before April 2019 is £215.00 (£155.00 if a solicitor is used) for an estate with a value above £5,000.

This is about to change from April 2019, with a significant increase in fees to finalise an estate. Some have called this a stealth tax, under the heading of 'fees', and the increase will be banded dependent on the value of an estate, up to a maximum fee of £6,000.

The limited good news is that the minimum estate value to which the new fees applies rises to £50,000.

The bad news is that thereafter, the fees are of course higher. For an estate value up to £300,000, the fee increases to £250. There are no current plans for any discounts for using a solicitor.

The table below notes the range of estate value and charges:

Estate Value

New Charge

0-£50,000

Nil

£50,000 - £300,000

£250

£300,000-£500,000

£750

£500,000-£1M

£2,500

£1M-£1.6M

£4,000

£1.6M-£2M

£5,000

£2M +

£6,000

As you can see, this is a significant rise in costs from the current system.

In a recent BBC report (October 2018), Guildford was deemed to be the inheritance tax capital of the UK outside London, with many estates (658) paying £231,000 in 2015/2016 in tax to complete the estate. Assuming both nil rate bands were used of £325,000 each (£650,000 in total) we estimate that the average estimated estate value to pay this level of tax was £1,227,500. Based on this assumed valuation, the new Probate fees would have increased from £215.00 to £4,000.

More detail on this can be found here: https://www.bbc.co.uk/news/business-45964915

Chapters Financial is not responsible for the content of external websites.

The ministers that voted this change through have done so under the legislative heading of fees (rather than additional taxation). From a financial planning perspective, it is still a cost burden that the family receiving the estate will have to pay and bear.

There is much to consider when looking at the issue of estate and inheritance tax planning. The team at Chapters Financial has significant experience in this area and would be pleased to help. We do not provide legal advice, and this should be sought from a suitable professional. If you do not have your own contact, we would be happy to make a suitable referral.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS

Director

CFP Chartered FCSI

Chartered Financial Planner