The Ministry of Justice announced on Friday, 24th February that the proposed changes to Registry fees for Grants of Probate will go ahead in May 2017.
The additional fees are intended to contribute to the operating costs of Her Majesty's Courts and Tribunals Service (HMCTS).
The proposal will proceed despite the overwhelming majority of respondents disagreeing to the proposed fee structure in the consultation, both to the value of the fees and the concept of a banded fee schedule.
Current fee structure
Under the current fee structure, all estates above a net value of £5,000 pay a flat fee of £155 for an application for a Grant of Probate if lodged by a professional and £215 if lodged by an individual. There is no charge for estates of less than £5,000.
New fee structure
The new fees will be banded based on the value of the estate (before inheritance tax) as follows:
|Value of estate (before inheritance tax)||Fee|
|Up to £50,000 or exempt from requiring a grant of probate||£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 £1,000,000||£4,000|
|Exceeds £1,000,000 but does not exceed £1,600,000||£8,000|
|Exceeds £1,600,000 but does not exceed £2,000,000||£12,000|
Access to estate funds
The key difficulty with the proposal is the Grant of Probate must be obtained in order to gain access to most assets within an estate.
The proposal addresses this by stating that access to funds for the fee must be obtained in the same way that funds are obtained to meet inheritance tax commitments, that is:
- Cash in the deceased estate;
- Personal assets of the executor;
- A personal loan obtained by the executor; or
- An alternative executor or administrator put in place who may have better access to funds.
Currently one of the key ways funds are obtained for inheritance tax is via the Direct Payment Scheme, where payments are made from the bank accounts of the deceased direct to HMRC.
While no such process is yet in place to pay the new probate fees, the British Bankers’ Association and the Building Societies’ Association have agree to assist the Ministry of Justice in producing guidance for executors.
Provision will remain for exceptional fee remissions to be granted at the discretion of the Lord Chancellor where all possible options have been exhausted and undue hardship would be caused without a remission. A limited grant may also be provided to enable executors to access to assets for the sole purposes of paying the fee.
The Government response has left two key points unanswered.
- Will the new fee structure be for applications or deaths after May 2017; and
- How will the value of the estate be calculated (e.g. will spouse exempt assets be included?).
We are currently seeking answers to these questions from the Ministry of Justice and we will provide updates on our website as further information becomes available.
If you would like any further information on any of the above please contact a member of our private client team on 01245 493939 or email email@example.com
This is not legal advice; it is intended to provide information of general interest about current legal issues.