IHT and the probate charge

Posted on by

Affluent families in England and Wales face paying probate charges of up to £6,000 from this month after ministers confirmed it as a fee rather than a tax.

Families have been used to paying flat fees of up to £215 to obtain the grant of probate needed in England and Wales to administer estates worth more than £5,000.

Critics had labelled the move as a “stealth tax”. Taxes are usually introduced in parliamentary bills, before going through a committee stage, and being voted on by MPs and Lords.

Ministers, however, circumnavigated this by classifying the charges as a fee, which saw the legislation narrowly approved by MPs and passed as a statutory instrument.

Instead of the flat rate, which is in place until 5 April 2019, the proposed system sets fees on the following sliding scale based on the value of an estate.

Value of estate before inheritance tax Proposed fee
Up to £50,000 or exempt from requiring a grant of probate £0
£50,000 – £300,000 £250
£300,000 – £500,000 £750
£500,000 – £1m £2,500
£1m – £1.6m £4,000
£1.6m – £2m £5,000
Above £2m £6,000
Source: Parliament.UK

 

The probate changes have been in the pipeline for at least two years but were scuppered by Prime Minister Theresa May’s decision to call a snap general election in June 2017.

Back then, the proposed maximum charge on estates worth more than £2 million was £20,000.

Around 200,000 estates are expected to be liable to pay the new probate charges, despite being exempt from inheritance tax.

Lucy Frazer, minister of justice, said:

“The reform of the [probate] service aims to reduce the burden on applicants, by providing a more efficient and simpler application process.

“By raising the estate value threshold from £5,000 to £50,000, we will be lifting around 25,000 estates annually out of fees altogether.

“For those who do pay, around 80% of estates will pay £750 or less.”

Talk to us about estate planning.

Comments are closed.