Proposed probate fee hikes slated as ‘new death tax’

Solicitors have expressed concern about a hike in probate fees to as high as £6,000.

The proposals, announced in a written statement by justice minister Lucy Frazer this week, are to replace the existing flat fee for probate of £155 for those applying with a solicitor or £215 for individuals with a sliding scale of fees.

Those at the lower end of the financial spectrum will benefit—the threshold for the value of estates paying the fees will rise from £5,000 to £50,000. That means about 25,000 estates each year will be exempt, Frazer said, while about 80% of families will pay £750 or less.

Estates worth £2m or more, however, could be charged the maximum fee, £6,000.

Frazer said: ‘Fees will never be more than 0.5% of the estate’s value… with all income going directly to our courts and tribunals.’

However, Nick Rucker, partner at Irwin Mitchell Private Wealth, described the proposed increase, due to go ahead in April, as ‘a new death tax’.

‘It will present real problems for those who have land but don’t have cash,’ he said. ‘An example would be widows where the property remained in the name of a late husband: in such a case no inheritance tax would be payable, but a widow would still need to pay the much higher fee in order to get probate and the property transferred into her name.

‘It’s also potentially going to lose a lot of inheritance tax for the government and prove counterproductive as a measure. Many providers of “trusts to avoid probate” will get people to pay for setting up trusts in their lifetimes so that probate is not needed when they die.’

This week’s proposals represent a climbdown on controversial plans, announced last year and subsequently dropped before the 2017 general election, to hike probate fees to as high as £20,000.