The government announced at the end of 2018 its plans to re-introduce an increase of the probate application fee. The change would scrap the flat fee for all estates above £5,000 in favour of a probate fee based the value of the estate. Plans to increase the fee were first announced in 2016 and were quickly scrapped with a looming general election.
At present, a fee is payable to the court when applying for a grant which allows a deceased person’s estate to be administered. The fee is £215 for an application made by an individual, or £155 for applications made by a solicitor.
The proposed fees are as follows:
The Ministry of Justice anticipates increasing the threshold from £5,000 to £50,000 will mean an additional 25,000 estates per year will not attract a fee. The government has estimated the increase could generate £185 million a year by 2022/23 and these funds will be used to support underfunded areas of the courts and tribunals service.
The two main points of criticism surrounding the increase stem from the process used to bring the increase into effect, and the impact it will have on those applying for a grant.
In order to make the proposals effective, the government will do this by way of a statutory instrument. A statutory instrument is not always subject to parliamentary procedure and often becomes law on the date stated in them. Even where a statutory instrument is subject to parliamentary scrutiny, it is far less than what is required compared to make an act of parliament. The lack of inspection has led to the increase in fees being dubbed as a ‘stealth tax’ and even an abuse of power.
How affected estates will fund the fee is still unclear. Those applying for a grant may not have funds to meet the application fee and may have to resort to obtaining loans to apply. Even where an estate may have sufficient funds to cover the fee, an estate is frozen between death and obtaining the grant meaning that these cannot be used – unless the bank agrees to release funds early.
The increase in fees has also drawn criticism from the charitable sector. A consortium of charitable institutes penned an open letter to Lucy Frazer, the minister responsible for legal fees, outlining their concerns that the increase in fees will mean that charitable legacies given in Wills will be reduced. It is estimated that charities could lose as much as £10 million a year from legacies they receive.
The new fees were supposed to take effect on 1 April 2019 however formal approval is still needed by the House of Commons. A date for approval has not been timetabled in parliamentary business. If approved, the proposals will come into force 21 days later.
“The lack of inspection has led to the increase in fees being dubbed as a ‘stealth tax’ and even an abuse of power.”