The government are planning rises in probate fees according to the value of the property left by an individual in their will.
The consultation, which sets out proposals for reforming the fee, opened on 18 February, and runs until 1 April 2016. The current flat fee will change to a banded approach, proportionate to the value of the estate. This follows last year’s increase in probate fees, which set probate application through a solicitor at £155 and personal applications, or those not through a solicitor, to £215.
The proposed probate application fees are as follows:
£300 for estates worth more than £50,000 and up to £300,000
£1,000 for estates worth more than £300,000 and up to £500,000
£4,000 for estates worth more than £500,000 and up to £1 million
£8,000 for estates worth more than £1m and up to £1.6 million
£12,000 for estates worth more than £1.6m and up to £2 million
£20,000 for estates worth more than £2 million
The fee payable is based on the value of the estate before exemptions and reliefs have been applied, which means Agricultural Property Relief and Business Property Relief cannot be deducted before calculating the above as far as the application is concerned.
This will also prove a huge burden on executors of the estate who will need to raise these funds before an application can be made. Access to cash is extremely limited prior to the issue of the grant, and does not take into account that many farming families are asset rich but cash poor.
Some families could also be in a situation where they have to pay this increased fee when each of husband’s and wife’s estate is administered, meaning some families will pay £40,000 to be able to legally administer their loved one’s estates, which could leave the farming business struggling to operate, or having to sell land or buildings to cover the cost.
Careful consideration will need to be given to tax planning and the options available to potentially set aside the fee for the grant of probate to the Executors. Please contact us to discuss the matter further.