A New Tax Year – Some Important Changes

The new tax year (from 6 April 2019) has brought in some changes including new rates for minimum wages, benefits and tax. Another change, which has not been very well publicised, affects the charges for a grant of probate on a deceased person’s estate. How could this affect people who are thinking about the best way to pass on their estate?

What is a grant of probate?

As an executor, you will need to apply for probate to give you the legal right to deal with the estate of the deceased. This can only be done once you have paid any Inheritance Tax (IHT) due. You will need to fill in a PA1 form and the relevant IHT form. You can get the PA1 forms online at gov.uk or by calling the Probate and Inheritance Tax Helpline on 0300 123 1072.

Once you have completed the forms, send them to your local probate registry along with the death certificate, original will (if there is one) and three copies of the will. You must also send the fee.

Charges for grant of probate

Before 6 April 2019, obtaining a grant of probate for an executor of an estate worth greater than £5,000 would cost a flat fee of £215 if made by an individual or £155 via a solicitor, regardless of the size of the estate.  But the recent changes mean the grant of probate fee will now vary according to the size of the deceased’s estate.

The good news is that the size of the estate on which there is no fee will rise from £5,000 to £50,000.  This will help executors of relatively small estates, typically where the deceased might have had some savings but did not own a property.

The bad news is that for an estate worth between £50,001 and £300,000, the new charge will be £250, a 16% rise.  This could, for example, apply to a person’s estate if they owned a small residential property.

Charges rise even further

The problem is, the next band applies to estates worth between £300,001 and £500,000. A grant of probate on such an estate will cost £750. This is a huge rise of 349% on estates which might be in this band simply because the deceased’s potentially quite modest house has significantly increased in value in recent years.

The charge rises even further as the estate value increases, as shown below:

Estate Value Grant of Probate Charge
Up to £50,000    No charge
 £50,000- £300,000    £250 (+ 16%)
£300,000- £500,000    £750 (+349%)
 £500,000 to £1m    £2,500 (+1,628%)
£1m to £1.6m    £4,000  (+1,860%)
£1.6m- £2m    £5,000  (+2,326%)
Above £2m    £6,000  (+2,791%)

Imagine a situation where an executor has to apply for a grant of probate for an unmarried relative who lived all their life in a house with some land which, because it is in what is now a high-value, sought-after location, is worth just over £2m. That executor is going to have to find £6,000 from somewhere to pay the charge before even beginning to administer the estate.

Estate planning could help

The implementation of these changes may prompt people to think about the best way to pass on their estates to their loved ones without adding to the grief of losing a family member.

One way to do this is through trust planning. Trust assets do not pass through the probate process, so there are no delays and no probate charges on those assets.

Here at Fielding Triggs, we can help with this planning. Why not contact us for a free, no obligation, discussion about your estate planning? You can also book to join us on one of our free seminars. Or talk to us on 0333 000 7880.