MOJ to push ahead with probate fee shake-up

MOJ to push ahead with probate fee shake-up

The Ministry of Justice will pursue a banded structure for probate fees, which caused uproar early last year and was put on hold before the general election.

The proposals, which many thought had been shelved, have been heavily criticised on the basis they could cost inheritors thousands of pounds.

The current probate system sees a flat fee of £215 paid for all estates of more than £5,000 (or £155 for those applying through a solicitor), but the MOJ said last year it planned to replace this with tiered charges ranging from £300 to £20,000, depending on the value of the estate before inheritance tax.

The MOJ ultimately shelved the plans because it concluded there was no time to pass the necessary legislation before the UK went to the polls in 2017.

The announcement the plans would be revisted, published yesterday evening (5 October), revealed few details but specifed fees would never be more than 0.5 per cent of the value of the estate.

But Rachael Griffin, tax and financial planning expert at Quilter, said this percentage could still see those inheriting a large estate hit with "extortionate fees" because historically high property values meant a large number could fall into a top band.

Even at 0.5 per cent, fees on a £250,000 estate would be £1,250 - nearly six times more than the current level.

The latest figures from HM Revenue & Customs showed the rising value of assets such as property meant estates were growing and inheritance tax receipts reached £5.2bn in 2017/18, the highest level since the current system was introduced in 1986.

Ms Griffin said that although the announcement guaranteed the money raised would be spent on running the courts and tribunal service, it was of cold comfort to those hit by large bills.

She said: "Despite the reassurances it’s hard not to see this as a stealth tax on those who already pay inheritance tax. Easing the burden on lower estates and lifting 25,000 annually out of probate is admirable, but it still means for others they will face a steep fee during an emotional and challenging time."

Ms Griffin said the changes would add further complexity to estate planning.

She said: "Using trusts can help reduce the value of an estate for inheritance tax purposes, meaning a lower charge will apply. People concerned about how beneficiaries will pay the probate fees could leave sufficient funds in a life insurance policy, and provided the policy is written in trust, it can be accessed immediately on death, without the need for probate."