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How do the new probate fees affect our farming clients?

View profile for Caroline Dowding
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In 2016, the government announced a probate fee hike of exponential proportions, with the fee of estates worth over £2m being fixed at £20,000.

With the snap general election and Brexit looming, this plan was scrapped, and was seemingly dead in the water.

However, the plans have been resurrected, and whilst the fees are not as great as the previous proposal, they are still significant sums. Rather than an administration fee to cover the cost of the issuing of the grant of probate, they are seen to be an additional tax on the wealthy.

The fees currently stand at £155 for solicitors making an application for the grant of probate, or £215 if being made by an individual, and is regardless of the value of the estate.

The new fees, effective from April 2019, are as follows:

On application for the grant where the assessed value of the estate:

Fee Payable:

Exceeds £50,000 but does not exceed £300,000

£250

Exceeds £300,000 but does not exceed £500,000

£750

Exceeds £500,000 but does not exceed £1m

£2,500

Exceeds £1m but does not exceed £1.6m

£4,000

Exceeds £1.6m but does not exceed £2m

£5,000

Exceeds £2m

£6,000

 

The fee payable is based on the value of the estate before exemptions and reliefs have been applied. This means Agricultural Property Relief and Business Property Relief cannot be deducted before calculating the above, as far as the application is concerned.

The level of fees is particularly concerning for farming families who are often asset rich but cash poor, and this could place a huge strain on executors to find funds that simply are not available.

Some families could also be in a situation where they have to pay this increased fee when both the husband’s and wife’s estate is administered, meaning some families will pay £12,000 to be able to legally administer their loved one’s estates. This could leave the farming business struggling to operate, or having to sell land or buildings to cover the cost.

Whilst the fee order is still being debated (it will go before the House of Commons Legislation Committee tomorrow, Thursday 7 February, at 11.30am) early signs indicate that the fee increase will be approved, despite objections that such an increase is deemed to be a ‘stealth tax’ and a misuse of their fee-levying powers.

Our advice is that if you have recently lost a loved one, and still need to administer their estate, do not delay this process as this could prove to be very costly, with these proposed changes set to come into effect in April 2019. If you need assistance in obtaining probate then please do not hesitate to contact one of our wills, trusts and probate specialists.

I am based in our Colchester office and can be contacted on 01206 217394 or caroline.dowding@birkettlong.co.uk.

 

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