Probate: Arrival of the ‘Death Tax’?

Claire McTernan, Stamford Bridge Office
 22 Jan 2019

Probate fees could rise by up to 40 times the existing fee and see the maximum probate fee rise from £215.00 to £6,000.00 under new proposals. The proposals will see increases in the probate fees take effect as of April 2019. The proposals are being branded a ` death tax` and would affect those applying for probate following the death of another.

For as long as most Private Client practitioners can remember, the application fee for the extraction of a Grant of Representation (commonly known as ‘probate’) has been fixed.  In many Estates probate is required in order for the Personal Representatives to realise the assets of the deceased and distribute the Estate.

In April 2014, the fee for a professional application for probate more than trebled from £45.00 to £155.00. In early 2017, practitioners were shocked to hear of proposed increases to the fee which would have seen the introduction of a sliding scale between £nil for Estates worth less than £50,000.00 (rather than the existing £5,000.00) to a maximum of £20,000.00 for estates worth in excess of £2million. It did not come as so much of a shock when these unpopular proposals were shelved following the announcement of the snap General Election which was held in May 2017.

Unfortunately, the unpopular proposals have been brought back to life by ‘The Non-Contentious Probate (Fees) Order 2018’ which could result in increases to the probate fee as of April 2019. Under the new proposals a sliding scale will be introduced with high value Estates paying up to £6,000.00 application fee (significantly reduced from £20,000.00 maximum in the 2017 proposals).

Whilst the Government states that the number of Estates paying no fee will increase, as Estates with a value below £50,000.00 will be exempt from paying a fee, commentators argue that the proposals are simply yet another way of taxing people on death.

Charitable bodies are expressing concerns that the proposed sliding scale will significantly diminish their revenue due to the majority of Estates paying increased fees.

Another area of concern is that, without changes to the ability to access Estate funds, Personal Representatives may face hardship in order to pay the application fee. The application fee will need to be paid prior to extraction of the Grant of Representation, and the Grant is required to obtain funds from the deceased’s accounts and investments. Presently financial institutions will only allow withdrawal of monies from a deceased’s account for payment of Inheritance Tax and the undertaker’s account.

The Ministry of Justice insists that the proposals are not an additional tax on death, but that the extra revenue collected as a result of the increases will be used to fund a shortfall in the Courts Service. It is difficult to see how the increased fee can be justified.

If you would like to receive advice or assistance with the administration of an Estate, please contact your local Wills, Probate and Administration of Estates Practitioners.

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