This means that for now at least, the new fee structure will not come into force in May as previously planned. The current fee structure will remain in place which is £155 for solicitor applications and £215 for individual applications in all cases for estates that are larger than £5,000. There will continue to be no fee if the estate is below £5,000.
The new fees would have been determined by the size of the deceased’s estate on a sliding scale and could have been as high as £20,000 in some cases.
Pinney Talfourd has been closely covering this issue as the new fee structure was due to bring about a sharp increase in Probate fees for applications made after 1 May 2017.
The newly proposed fee structure for probate fees was recently reviewed by a Parliamentary Committee to consider whether it was a legitimate fee increase or whether it effectively amounted to a tax. The concerns raised were that if it did amount to a tax then it would be unlawful as the Lord Chancellor does not have the authority to introduce a tax without the consent of Parliament.
Despite these concerns, the Lord Chancellor announced that the Ministry of Justice would go ahead with the new fee structure, until today when it was announced there would be not be enough time to pass the new laws prior to general election.
You may have read our recent news article about the government’s proposal to increase the fees charged for issuing a Grant of Probate up to £20,000.
The new fee structure has been imposed as a Statutory Instrument, a form of secondary legislation, meaning it is not subject to Parliamentary scrutiny.
Since the announcement that the new fee structure would come into force in May 2017, a Parliamentary committee (the joint committee on Statutory Instruments) has raised concerns that the proposed fees are ‘disproportionate’ to the service provided and therefore could be seen as amounting to what critics are calling a ‘death tax’.
The significance of the concerns raised is that Lord Chancellor does not have the power to impose taxes without the consent of Parliament which must be embodied in statute and expressed in clear terms.
However, despite the criticism from the joint committee, the Lord Chancellor has stated that the fee increase will go ahead as planned unless Parliament formally intervene on the basis of the concerns raised by the joint committee.
On 24 February, the Ministry of Justice published its response to a recent consultation regarding an increase in fees for probate applications.
The current fee charged by the Probate Registry to obtain a Grant of Probate or Letters of Administration is fixed at £155 for solicitor applications and £215 for lay person applications. There is currently no Probate Registry fee if the value of the estate is below £5,000.
The consultation held by the Ministry of Justice proposed the introduction of a banded fee structure linked to the value of a deceased person’s estate. The government has stated that careful consideration has been given to these proposals and determined that the increase was necessary for the courts and tribunal system to continue to provide access to justice in the long term.
The new fee structure is expected to come into force in May 2017 and the increase in fees is projected to raise an extra £256m each year which the government has said will contribute to cutting the national debt.
Inevitably the new fee structure will attract widespread criticism and will add to the existing perceived unfairness of the Inheritance Tax regime. The added practical difficulty is that seemingly the Probate Registry will not issue a Grant of Representation until the Probate fee has been paid. This may not be practical as it is not always possible to access a deceased person’s assets until the Grant of Representation has been issued. It remains to be seen if banks will agree to release funds directly the Probate Registry prior to the Grant of Representation being issued but reasonable to expect that they will given that they are already willing to release funds for the purposes of settling Inheritance Tax or funeral costs. However, estates that comprise non-liquid assets may need to explore other means of raising funds to enable the Grant of Representation to be issued.