I have recently written a series of blogs on the planned steep probate fees increase. The plans will see the current fees of £155 (for lawyers) or £215 (for individuals) increase to between £250 and £6,000 (depending on the value of the estate).
The government’s intention had been for the fee increases to take effect in April 2019. However, given the current turbulent political landscape, there has been a delay in getting the legislation that will give effect to the changes through its final stage. Probate practitioners and executors are therefore faced with a number of unanswered questions.
When will the changes take effect?
My understanding is that it is still the intention for the changes to take effect in April. However, the legislation that will give effect to the change has not yet been through its final stage in the House of Commons. Once this happens, it will be a further 21 days before the new legislation comes into force.
It is not known when the legislation will be considered by the House of Commons. The Labour Party oppose the legislation and may try to force a full debate and House of Commons vote.
There is, therefore, continued uncertainty as to exactly when the changes will take effect. This is causing great difficulties for practitioners and executors who are working hard to finalise inheritance tax accounts and probate applications for ongoing estates they are administering, but do not know exactly the deadline they are working to.
Can incomplete applications be lodged?
Where estates are chargeable to inheritance tax, it is necessary to obtain a receipted form IHT421 from HM Revenue and Customs before the probate application can be submitted to the probate registry. Obtaining the receipted IHT421 can take several weeks. Probate registries will not usually accept applications without receipted IHT421s. However, in the current uncertain circumstances, probate registries have indicated that they will accept incomplete applications (without the IHT421) and it is hoped that such applications will still fall within the old fees regime, even if the receipted IHT421 is not received until after the new fees come into effect.
How exactly will the fees be calculated?
I have been asked by several practitioners whether the fees will be based on the value of the estate passing under the grant, or the value of the estate for inheritance tax purposes (i.e. including joint assets).
The draft legislation states (bold and underlining added by me):
“(a) in the case of an application for a grant, the value of the net real and personal estate (excluding any settled land and any relevant death gratuity) passing under the grant as shown-
(i) in the Inland Revenue affidavit (for a death occurring before 13th March 1975);
(ii) in the account required to be delivered under section 216 of the Inheritance Tax Act 1984(4) (for a death occurring on or after 13th March 1975), or
(iii) where paragraph (2) applies, in the oath which is sworn to lead to the grant, and
(b) in the case of an application to reseal, the value as shown in the document referred to in sub-paragraph (a)(i) to (iii), passing under the grant upon its being resealed”
This indicates that the relevant value for the purposes of the fee calculation is the value of the estate passing under the grant, rather than the value upon which IHT is being assessed.