Fear that probate fees rise could be 'a new inheritance tax'

Ministry of Justice probate fee changes coming into effect this spring will affect all individuals inheriting an estate worth more than £50,000 - and those inheriting estates worth over £2m will be hit by a fee increase of around 9,200 per cent.

The reforms come despite a government consultation period last year during which some 98 per cent of respondents expressed disagreement.

Current fees are £215 for individual applications and £155 for applications via a solicitor. 

But under the new proposals - some coming into effect on May 1 - estates worth between £50,000 and £300,000 would pay a £300 fee. Estates between £300,000 and £500,000 would pay £1,000; from £500,000 to £1m the charge will be £4,000.

Then from £1m to £1.6m the fee charge becomes £8,000 and £12,000 for those worth £1.6m to £2m. Estates valued at over £2m would be charged £20,000.

The Ministry of Justice says the proposals will lift 30,000 estates out of paying the fee altogether, by raising the exemption threshold from the current £5,000 to £50,000, but many experts fear that rising property prices across much of the country will push many applicants into categories that are far more costly then today.

Duncan Bailey of law firm Brabners says the changes represent a huge financial increase for those dealing with bereavement.

“The government must provide further clarity on the changes, particularly in relation to the implementation date, and we would urge those considering an application for probate to do so as soon as possible to avoid being hit by the new fees” he says.

“As the assets of a will are not released until probate has been granted, for many the changes will also spark a need for financial assistance – adding further administrative burdens to people who are going through a period of distress.

Consumer group Which? says executors will also no longer be able to claim help paying probate fees under the general remissions scheme, although there will be exceptions in extreme cases. In cases where the executor struggles to pay probate fees up front, the probate service will grant permission for them to pay out of the estate.

Some experts say that to avoid the charges - aside from applying for probate in the next two months - would be to ensure couples to own their homes in joint names or as tenants in common, or write assets into a trust.