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The Government has revived their plan to increase the cost of a probate application after the Ministry of Justice confirmed that it will implement a banded structure for the payment of probate fees from April next year.
The current application fee is a one-off fixed fee of £215 (£155 if you use a solicitor) irrespective of the value of the deceased person`s estate. However, the new charges will be linked to the value of the estate and will be as follows:
· Up to £50,000: no charge
· £50,000- £300,000: £250
· £300,000- £500,000: £750
· £500,000 to £1m: £2,500
· £1m to £1.6m: £4,000
· £1.6m- £2m: £5,000
· Above £2m: £6,000
Although the MOJ has stated that estates will never pay more than 0.5% of their estate value, the new charges will see costs rise dramatically for those with larger estates. For example, an estate worth £500,000 estate would pay more than 10 times the current fee at £2,500 while those estates worth over £1m will pay between £4000-£6000. Reports suggest that over 56,000 will be hit by the hike in probate application fees of between £2500-£6000.
The Government states that 80% of estates will not pay more than £750 and more estates will also not have to pay probate fees at all under the new rules as the probate fee threshold will rise from £5,000 to £50,000. Executors will have to pay the fee up front before reclaiming it from the estate once probate has been granted.
The purported reason for cost hike is to raise income to be invested in the courts and tribunal service which will help fund improvements to the Probate Service including the ability to apply for probate online.
Critics of the increase argue that this is nothing more than a ‘stealth tax’ – in short, Inheritance Tax by the `back door` - which will impact estates of higher value.
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