The Probate Debate; Fixed Fees vs The Sliding Scale
It may come as no surprise that an increase in probate fees is set to be introduced by April 2019. The proposal is to rid fixed fees for probate applications and instead introduce a scale which depends upon the value of the estate to determine the fee payable.
If the value of the estate is from £0.00 – £50,000.00, for example, then no fee is payable. However, at the opposite end of the spectrum, if the value of the estate is above £2million then the fee payable has hugely increased to £6,000.00.
The exact brackets of increased fees can be seen below: –
Up to £5,000.00 – No Fee
£5,000.00 to £50,000.00 – No Fee
£50,001.00 to £300,000.00 – £250.00 Fee
£300,001.00 to £500,000.00 – £750.00 Fee
£500,001.00 to £1million – £2,500.00 Fee
£1million to £1.6million – £4,000.00 Fee
£1.6million to £2million – £5,000.00 Fee
Above £2million – £6,000.00 Fee
The fixed fee structure, currently in place, attracted a mass of attention in 2017. The fairness surrounding the fixed fee for an estate worth £100,000.00 compared to an estate worth £1million brought with it a lot of controversy. However, the government at the time decided that the voting population would find the idea of a sliding scale harsh and therefore postponed the proposals.
Equally, the new proposal have brought with them the same level of controversy. The Office for Budget Responsibility published an Economic and Fiscal Outlook earlier this month claiming that the increase in probate fees will approximately ‘generate around £155 million a year in additional tax reciepts’. Is the new introduction a simple ploy to amass more money?
Of course the scale will have advantages to those whose estates are below £50,000.00, but, the new proposals are likely to affect the vast majority. For example, if we take the £300,001 – £500,000 bracket, the new scale imposes a 349% increase on the fee imposed.
Not only will the impact lie with those whose estates fall within the fees payable bracket, charities have also indicated that the new fees will impact them. It has been mentioned by The Institute of Legacy Management that the sliding scale could cause charities to lose out on over £10million every year since there are no exemptions in place for charitable organisations.
Perhaps the biggest problem faced will be for those who have left an estate which is heavily asset based; the general assumption is that here the fee is payable from monies outside of the estate. Whilst there are a lot of assumptions being made surrounding the implementation and subsequent consequences, a guidance document is set to be released prior to implementation.
Of course the very idea of a sliding scale is unpopular and the affect of such implementation is set to be incredibly disappointing. As of yet, it is not known whether the new structure will apply to deaths after the date of the new structure or applications received after the date of the new structure.
Should you wish to reduce the risk of paying a higher fee for probate matters then ACT NOW. We are here to help with anything that you may need surrounding the increase in fees and probate matters more generally.
All information is correct on the date of posting.