New probate fees: a guide for the public

flowers

UPDATE 21/04/2017: the Ministry of Justice has abandoned the new fee regime due to lack of parliamentary time prior to the 2017 General Election. See more information.

What is probate?
When someone dies, you need to get the legal right to deal with their property, money and possessions, and to do so you need a grant of representation, which is known as ‘probate’.

When is probate not needed?
Usually you won’t need to apply for probate if the estate does not include land, property or shares; if it is passing to a surviving spouse or civil partner because it was held in joint names (e.g. a joint bank account, or a home owned as ‘joint tenants’); or if the estate is valued at less than £15,000.

Each financial institution has its own rules, however, and may still require you to apply for a grant even if the value is under this threshold.

What is happening to probate fees?
In February 2017, the government announced that probate fees in England and Wales will change in May 2017 to a banded system, where fees increase with the value of the estate, replacing the current flat fees of £155 if you apply through a solicitor, or £215 for a personal application.

The proposal to link probate fees to the value of the estate was published in February 2016 and attracted overwhelming opposition. Nonetheless, the new system has been brought in, and was confirmed in the March 2017 Budget.

The fee structure as of May will therefore be as follows:

Value of Estate New Fee % Change (from £215)
Up to £5,000 £0 0%
£5,000 – £50,000 £0 -100%
£50,001 – £300,000 £300 +40%
£300,001 – £500,000 £1,000 +365%
£500,001 – £1m £4,000 +1,760%
£1m – £1.6m £8,000 +3,621%
£1.6m – £2m £12,000 +5,481%
Over £2m £20,000 +9,202%

When in May does the change kick in?
The government has not yet confirmed the exact date in May from which these changes will apply. The new fees will apply to all applications received by the probate service on or after this still-to-be-announced date in May, irrespective of the date of death. Probate registries have said that any application received within working hours of the Probate Registry before the implementation date will be charged the current fee.

What can you do?
Applying for probate takes time as you need to gather a number of documents and all the relevant information regarding the value of the estate to ensure any inheritance tax obligations are correctly accounted for. If you are very recently bereaved it may therefore be very difficult to submit a full application for probate before the new fees are implemented.

If, however, you have already started the process, you may want to try and get your probate application in before May to ensure you pay the current flat fee.

If you are applying for probate through a solicitor, your solicitor will be aware of the situation and will be doing everything they can to try to get your probate application lodged with the probate registry before the new fee structure applies.

If you are making a personal application, you should be aware of a few important points:

  • In cases where you are required to submit an IHT400 or any document for assessment by HMRC for inheritance tax purposes, many probate registries have said that it is possible for you to submit the appropriate forms to both HMRC and HMCTS Probate simultaneously. They will not issue your grant until the approved IHT421 is received, but the probate registry will mark your application as lodged. To assist them in not raising this as a query, they have advised that you clearly mark on your application that the inheritance tax document will follow after assessment.
  • A ‘full application’ for probate purposes, and therefore to qualify for the appropriate fee, must include:
    • Full oath sworn by all deponents and commissioners
    • An original will and codicil (where appropriate) endorsed by all commissioners and deponents
    • The appropriate number of correct copy wills and codicils
    • An Inland Revenue account (with the exception of IHT400s/421s where assessment is ongoing and it has been noted on the covering letter that it will follow)
    • All associated documents including any affidavit evidence required at the time of submission, renunciations, powers of attorney
    • The appropriate fee.

    Upon receipt of an application in this form prior to commencement then the existing fee will be charged.

  • If the estate you are dealing with is asset rich but cash poor, the probate registries have said that executors will be able to apply to the Probate Service to access a particular asset for the sole purpose of paying the fee. Instalment options will not be available.

Where can you get more information?
The government has not published any public information on this issue beyond the consultation documents:

In the absence of public-facing information from the government, we will continue to publish updates on this, as and when they are announced, here on the STEP Blog.

If you have any specific questions about your probate application please contact your local probate registry.

George Hodgson is Chief Executive of STEP

New probate fees: FAQ

UPDATE 21/04/2017: the Ministry of Justice has conceded that the new fee regime has been abandoned due to lack of parliamentary time. See more information.

 

Newcastle District Probate Registry has supplied the following FAQs to help practitioners implement the new probate fees.

Q. What happens in cases where there is a need for an HMRC Assessment will any delay mean I incur the higher fee?

In cases where you are required to submit an IHT 400 or any IHT document for assessment by HMRC for Inheritance tax purposes then it is possible for you to submit the appropriate forms to both HMRC and HMCTS Probate simultaneously. We will not issue your grant until the approved IHT 421 is received but we will mark your application as lodged. To assist us in not raising this as a query it would be advisable to clearly mark your application that the IHT document will follow after assessment.

Q. Do we have the actual date of implementation?

No we do not have the actual date of commencement yet. However we can assure you that on receiving that date a mail shot will be released immediately informing you of that date. HMCTS Probate would however like to work with you now to ensure that we reduce as much as possible the added burden on applications nearer that date. You can assist us in doing this by following the steps in the mail shot sent to you on Monday 6th March.

Q. How do I calculate the estate value that the fee will be charged upon?

The fee is calculated from the net value of the estate after deducting liabilities or debts from the total of assets and gifts – you can do this using the appropriate Inheritance Tax form.

  • On an Inheritance Tax Summary Online application this figure will be the figure noted in the net estate value box
  • On form IHT 205 the net estate value for fees purposes can be found at Box F
  • On form IHT 207 the net estate value for fees purposes can be found at Box H
  • On form IHT 421 the net estate value for fees purposes can be found at Box 5

Q. What is considered as a full application?

A full application for Probate purposes and therefore to qualify for the appropriate fee is defined as the following. It must include:

  • An full oath sworn by all deponents and commissioners
  • An original will and codicil(where appropriate) endorsed by all commissioners and deponents
  • The appropriate number of correct copy wills an codicils
  • An Inland Revenue account (with the exception of IHT 400’s/421’s where assessment is ongoing and it has been noted on the covering letter that it will follow)
  • All associated documents including any affidavit evidence required at the time of submission, renunciations, Powers of attorneys
  • The appropriate fee.

Upon receipt of an application in this form prior to commencement then the existing fee will be charged.

Settlers and Prelodgements are not considered as full applications and therefore submission of an oath for settling prior to commencement and a subsequent oath after commencement will result in the new fee being applied.

Q: When will the new fees be implemented – at date of death or date of application?

The new fees will apply to all applications received by the probate service on or after the implementation date of the new fees irrespective of the date of death. Any application received within working hours of the Probate Registry before the implementation date will be charged the current fee. Subject to approval of the necessary legislation by Parliament, we expect the new fees to take effect from May 2017, but the exact date will be confirmed nearer the time.

Q Is there to be any equivalent of the IHT instalment option for an asset rich / cash poor estates?

There will not be an instalment option available to pay fees. If the estate does not have enough cash to pay the fee, executors will be able to apply to the Probate Service to access a particular asset for the sole purpose of paying the fee.

Q. How does the new fee affect property held between cohabitating couples?

The law remains the same. Any jointly owned assets (e.g. property held as joint tenants) will not require probate, regardless of whether couples are married, in a civil partnership or neither. All couples are free to choose how they hold their property, and they can change to a joint ownership arrangement via the Land Registry.