Yahoo Finance New death tax confirmed: probate fees of up to £20,000 will apply from May
The Government has ignored overwhelming opposition and pushed ahead the introduction of a dramatic rise in probate fees, taking effect from May 2017.
In the most extreme cases, estates worth £2m or more will have to pay £20,000 to execute the wishes of the deceased's will.
Currently, a £215 flat fee applies if probate is applied for by friends or family, or £155 if a solicitor completes the process.
But in two months' time the system will be replaced by a sliding scale based on the value of an estate.
And, as Telegraph Money has previously warned, the charge is paid in addition to inheritance tax, which is levied at 40pc on assets above each individual's £325,000 threshold.
The changes come into force at the same time as more families are taken out of inheritance tax entirely, as a result of the new "family home allowance".
How much will my estate pay?
Estates below £50,000 will pay nothing at all - this applies to 58pc of all estates in England and Wales, according to the Government.
But all estates worth more than £50,000 will be forced to pay increased fees. Those between £50,000 and £300,000 will pay £300; estates worth over £1m but less than £1.6m will pay £8,000; and those above £2m, £20,000 - a 9,000pc increase (see table, below).
How much will probate cost your estate?
Under the plans the Government said no estate will pay a fee that is more than 1pc of its value. It said 92pc of estates would pay £1,000 or less, 98pc would pay £4,000 or less and fewer than 2pc of estates would pay £8,000 to £20,000.
The Ministry of Justice confirmed the changes, despite nearly total opposition registered in a public consultation process.
Gordon Andrews, a financial adviser at Old Mutual Wealth, said the move to a tiered structure could have been acceptable but the level of fees are "unjustified".
He said: "At its crudest, one could argue that this is yet another stealth tax being levied by the Government, which can add up to 1% in fees on the value of an estate.
"These proposed changes will add further complexity to estate planning. Using trusts can help reduce the value of an estate for inheritance tax purposes, meaning a lower charge will apply.
"People concerned about how beneficiaries will pay the probate fees could leave sufficient funds in a life insurance policy, and provided the policy is written in trust, it can be accessed immediately on death, without the need for probate."
In its official response to the consultation, the Government said while it understood concerns over the level of the proposed fees, the increases "are necessary" to fund the courts and tribunal systems "in the long term".
You pay your probate fees at the same time as sending your probate application form to the Probate Registry. You should also include the inheritance tax form at this point, even if you don't think there is any tax due.
