Increases to Probate Court fees
On 18 February 2016 the government published a consultation on a new proposal about court fees payable when making applications for grants of representation. A grant of representation is a court order which authorises personal representatives to administer the estate of a deceased person.
Current Fee Structure
Historically the court fees for grants of representation have been modest. The current fees for probate are set at a flat rate of £155 where a grant of probate is obtained by a solicitor and £215 when the application is made by an individual. However, estates worth less than £5,000 do not have to pay a court fee at all.
Proposed Fee Structure
The new proposed fee structure is set out below:
|Value of Estate (before inheritance tax)||Proportion of estates in England and Wales||Proposed Fee|
|Up to £50,000 or exempt from requiring a grant of probate||
Exceeds £50,000 but does not exceed £300,000
Exceeds £300,000 but does not exceed £500,000
|Exceeds £500,000 but does not exceed £1m||5.0%||
Exceeds £1m but does not exceed £1.6m
Exceeds £1.6m but does not exceed £2m
Plans for Reform
According to government statistics HM Courts and Tribunals Service (HMCTS) cost £1.8 billion in 2014/15, but only £700 million was received by HMCTS in income, the difference being made up by the tax payer.
Part of the purpose of raising the court fees for applications for grants of representation, is to contribute towards this deficit and to finance the creation of a new online service designed to make the process of applying for a grant of representation easier and smoother. The aim of this would be to remove the need for a visit to the court or a firm of solicitors to swear oaths or lodge papers, so the majority of applications could be dealt with online.
Connection with Inheritance Tax
Despite the inheritance tax threshold being frozen since 6 April 2009, at the time the consultation is published the threshold is due to rise in future tax years for people who leave their main residence to their children, reducing the number of estates that would have previously paid inheritance tax. The rise in court fees might be seen as an alternative method to raise revenue. However, for estates over £2.2 m there is no main residence nil rate band, but there would still be a court fee.
If the process can be dealt with online and new working systems brought in by the court it is likely to expedite applications for grants of representation. Based on statistics, the new fees should enable HMCTS to receive additional funding, which should make access to justice easier.
If consumers do not seek advice from professionals in relation to estates there may be inheritance tax reliefs they are entitled to which could be missed. This could lead to the incorrect amount of inheritance tax being paid.
Without advice applications could be completed incorrectly at the time of submission, which could create difficulties later during the administration of the estate, which in turn could become costly to deal with.
If there are not enough liquid assets in the estate the personal representative may have to raise a loan to pay the court fees, which would be payable by the estate at no cost to themselves, but it makes the job of executor more complex and perhaps individuals should think twice before acting as an executor of an estate.
The consultation indicates the Lord Chancellor would have the power to grant a remission in exceptional circumstances where it could be proved that paying the fee would cause undue financial or other hardship, but this in itself could be complex and the cost of this process would need to be met, creating an additional burden on the system.
The consultation invites responses by 1 April 2016. Go online to download a copy of the document and reply to the questionnaire attached to the consultation paper.
It will be interesting to see if the government proceeds with these proposals. Come what may personal representatives will still want to ensure that they deal with the administration of estates properly despite the possible increase in the costs of administration by taking appropriate professional advice to avoid personal liability and exposure to risk.