The Ministry of Justice has announced proposals to increase probate fees by up to 129 times for the highest value estates. Under the proposals, estates valued at less than £50,000 would be exempt from paying any probate fees and supporters of the proposals argue this will lift 30,000 estates out of this requirement. Estates worth between £50,000 and £300,000 will be subject to a £300 fee with probate fees rising above this threshold. At the top of the scale, estates worth in excess of £2m will be subject to probate fees of £20,000.
Andrew Hasnip, Partner at The Wilkes Partnership said “These proposals represent an aggressive hike in fees which currently stand at a flat rate of £155 when probate is carried out by a solicitor, or £215 if done privately. With the average house price currently at £300,000, many individuals inheriting ‘modest’ estates will be hit by significantly higher fees than before”.
The proposed fees will help further reduce the government’s deficit but there are criticisms that the proposals do not represent value for money.
Continues Andrew Hasnip “The probate office carries out approximately the same amount of work, regardless of the value of an estate, hence the ‘fairness’ of the flat rate fee; it is very hard to justify a fee of £20,000 when no extra value is being delivered.”
Undoubtedly, individuals will now be considering how they can reduce their exposure to these potential fees. Concludes Andrew “Given the proposed fees are based on the value of an estate at death, individuals may be wise to consider gifting assets during their lifetime. Not only may this potentially reduce their exposure to Inheritance Tax, it may also reduce the value of their estate and therefore their likely exposure to the higher probate fees. Individuals owning estates at just above the thresholds in particular should speak with their professional advisers and discuss the options available to them.
If you would like assistance in relation to your inheritance tax planning, please call Andrew Hasnip on 0121 710 5830 or email firstname.lastname@example.org.