Probate fees: will you pay more as a result of new ‘death tax’ hike?

Smaller estates will pay nothing, but bigger estates will face much larger probate fees. Read on to see how you'll be affected.

Thousands of families up and down the country will face increased fees when administering the estates of loved ones that have passed away after the Government confirmed it was pushing ahead with controversial increases to probate fees.

When a loved one dies, the executor of the will needs to apply for a grant of probate. This basically gives them the legal right to settle the estate and divide it up according to the wishes of the deceased.

And it’s the cost of getting that grant of probate which is subject to a fee revamp from the Government.

You can learn more about all the fees and costs you'll need to consider when the worst happens with this guide.

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How probate fees are changing

At the moment, there are two possible probate fees to consider. If you plan to carry out the process yourself and apply in person then you will have to pay £215.

However, if you get a solicitor to handle it for you, that fee falls to £155.

This is changing from next April, with the Government pushing ahead with banded fees, which increase with the size of the estate, as the table below details:

In other words, if you leave an estate worth less than £50,000, then your family won’t need to pay anything.

But if the estate is worth more than £50,000, your loved ones are going to have to cover a more significant bill, while those with even larger estates will have to pay vastly bigger fees.

The fees are still in many cases lower than those originally planned by the Government, with a maximum fee of 0.5% of the estate now in place, rather than the 1% cap previously suggested.

Learn more about cutting your Inheritance Tax bill with this guide

What has the Government said?

The probate hikes were first proposed in 2016, and it was duly met with widespread criticism. So some might be surprised the Government has decided to push ahead with them. 

However, Lucy Frazer, the parliamentary undersecretary of state for justice, pointed out that the Government is investing £1 billion into modernising and upgrading the courts system so that it works better for everyone, and argued that it is crucial that it benefits from proper funding, which is why the fee system is being revamped.

She added: “This new banded fee model represents a fair and more progressive way to pay for probate services compared to the current flat fee and reflects our commitment to protecting access to justice by ensuring we have a properly funded and resourced courts system.

“We are also confident these fees will never be unaffordable.”

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A ‘death tax’

However, the move has attracted plenty of anger.

Nick Rucker, national head of tax, trusts and estates at Irwin Mitchell, said that the probate fee hike was essentially a death tax, which will present real problems for people who have land but little cash.

He added: “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.”

Ben Tyler, private client solicitor at GLP Solicitors, agreed that this system could place “undue burden” on executors.

He continued: “Will executors have to stump up the cost themselves? Will they have to take out a loan? I suspect schemes will be introduced that mirror the funeral fees arrangement whereby banks will issue a cheque for the fee from the deceased’s account on production of an invoice before a grant has been obtained.”

The Government has said it plans to publish guidance for executors on how to cover the cost of this fee, and what support will be in place should they be unable to pay these fees themselves before probate is granted.

Rucker added that the increased fee is likely to see more individuals set up trusts to try to avoid the need to go through the probate process at all.

He continued: There are already such schemes out there, often sold with dubious claims, and it is likely they will be sold even more aggressively now.”

How to create a cheap will that will ensure your assets are divided according to your wishes