Following a recent consultation, the Ministry of Justice has announced plans to significantly increase the fees charged for obtaining a grant of representation. If approved these changes are likely to come into effect from 1st May 2017.
A grant of representation (also known as a grant of probate or letters of administration) is often required by the deceased’s personal representatives to enable them to deal with the deceased’s assets. Currently the court fee for obtaining a grant of representation for estates worth more than £5,000 is £215 (or £155 where the application is prepared by a solicitor).
The new proposals will remove the flat rate probate fee and will instead introduce fee bands where the fee will increase in line with the value of the estate. These changes will benefit those estates with a value of less than £50,000 as there will be no probate fee payable by these estates. However, the table below demonstrates the significant increase in proposed fees for those estates exceeding the £50,000 threshold.
|Value of estate (before payment of Inheritance Tax)||Proposed fee|
|Up to £50,000||£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 £1million||£4,000|
|Exceeds £1million but does not exceed £1.6 million||£8,000|
|Exceeds £1.6million but does not exceed £2million||£12,000|
Despite the fact that less than 2% of respondents to the Ministry of Justice consultation agreed with the proposed changes, the Ministry of Justice has decided to press ahead with this dramatic fee increase. The justification behind this is that the increased fees are a way of ensuring that the countries courts and tribunal system are able to continue to provide access to justice in the long term.
One of the main objections to the proposed changes is that the increase in fees is simply a cash finding initiative and that the fee bears no relation to the actual work involved in issuing the grant of representation. In the majority of cases, whether the estate is worth £50,000 or £2million there will be no difference in the amount of work involved for the probate registry. This makes the banded fee structure unfair and is more a ‘stealth tax’ than a fee.
These increased probate fees will have to be paid regardless of whether the estate is subject to Inheritance Tax or not. As with Inheritance Tax, the probate fees will have to be paid before a grant of representation can be issued. If the estate includes money in a bank or building society account, this money can be released to pay the probate fees. However, where there is not enough cash available to pay these fees the personal representatives will need to find other ways of payment. This could include the personal representatives having to fund the fees themselves (and later reclaiming them from the estate) or taking out a bridging loan. This has the potential to cause financial difficulty and, in cases where the only real asset is the deceased’s property, could result in the property having to be sold.
Another major concern is that these changes could leave some people open to pressure to place assets into trust or to transfer assets before they die in order to avoid higher probate fees. In some circumstances it may be appropriate for trusts to be created or assets to be transferred but this should only be done after careful consideration of all of the pros and cons.