Rise in Probate Fees Called Out as a “Death Tax”

Phillip Hammond

Tax experts have spoken out against a new “death tax” that has been brought in by the government without a proper debate in Parliament. The changes, which impact probate fees, could leave many families paying much more when a loved one dies.

Currently, there is a flat fee of £215 if friends or family organise the probate – the managing of someone’s estate after they pass away. This reduces to £155 if the process is handled by a solicitor.

Under the new rules, this has been changed to a sliding scale. Families may now face much larger charges to obtain probate. The exact amount depends on the size of the estate:

Value of EstateNew FeesIncrease on Previous Fee
Less than £50,000FreeN/A
£50,000 - £300,000£250£35
£300,000 - £500,000£750£535
£500,000 - £1 million£2,500£2,285
£1 million - £1.6 million£4,000£3,785
£1.6 million - £2 million£5,000£4,785
More than £2 million£6,000£5,785

But, it’s not all bad news. There will now be no fee for estates valued below £50,000. As the current level at which you have to pay is much lower, at £5,000, this will lift around 25,000 estates annually out of charges altogether.

However, rising house prices across the country mean that people are more likely to cross this threshold and be subject to the increased probate fees. 

An estimated 280,000 families each year will owe more than they did previously. It’s also expected that 80% of chargeable estates will pay at least £750. Even worse, the new structure means that being even £1 over a threshold will cost thousands of pounds in extra fees.

These figures, however, aren’t the originally suggested plans. The first numbers proposed were noticeably higher, with estates valued above £2 million hit with a £20,000 fee. Thankfully, these increases came to nothing as the then Government ran out of Parliamentary time to pass it through.

The changes come into force in April 2019, but the rules are already part of the law. This is possible through a parliamentary procedure that allows changes to be made to existing laws without a debate. Doing so means the government can bring in significant changes, while avoiding questions about their broader impact and implications.

Stack of pound coins

The government believes the new structure will help fund the court system, and is a “fair and more progressive way to pay for probate services”. The Ministry of Justice has even argued that the new structure being introduced is not a tax. But, legal experts disagree.

Critics of the scheme argue that having a banded system makes little sense. Probate fees are supposed to cover the expense of the probate service. Regardless of the size of an estate, the work to process an application is no different. Given this, it is difficult to justify how costs can be so high for some and not others.

Although probate costs can be recovered from the estate, there are also still looming questions about how families will afford these higher fees. As assets are frozen until the grant of probate is received, some people may need to resort to loans to cover this cost.

By planning ahead now, you can avoid this increase and also reduce anxiety for your loved ones when the time comes. Paying a fixed fee at today’s prices could end up saving you a great deal. It also means that your friends and family won’t have to pay anything in the future. Contact Severn Estate Planning today to discuss doing this by making a Probate Plan.

And, if you want to avoid paying probate altogether, consider setting up a Family Protection Trust.

If you’re worried about probate costs and changing legislation, Severn Estate Planning can help you. Get in touch now to receive professional advice and find out how much you could save.