Probate fees hike and forms reform confirmed for January 2022

The long-anticipated increase to the fees payable on applications for probate will take effect for applications made from 26 January 2022.

The increase to £273, from £155 for applications made by professionals and £215 for individuals, follows a 2021 government consultation on a proposed increase aimed at ensuring that probate services operate on a break-even basis. The increased flat fee payable for all estates over £5,000, is in sharp contrast with the controversial plans to charge a scale of fees based on the value of the assets of a deceased person that were unveiled in 2018. These were hastily abandoned after a huge backlash against the measure that was branded a ‘stealth death tax’ in the resulting media storm.

The announcement is made against the backdrop of a probate process that has undergone a gruelling overhaul in the last two years, seeing the introduction of an online probate application system and the closure of many regional probate registries. Even before the pandemic, applications that would often take less than three weeks to process, could take three months or more in the new system and mistakes on official documents became much more common. Whilst service has gradually improved, much progress still needs to be made and paper applications remain necessary for certain situations, all causing consternation for service users.

The fee increase represents a hike of 76% for professionals and 27% for individual applicants. The previous fee difference, now abolished, recognised that applications made by individuals are much more likely to contain mistakes and take longer to process than those made by professional advisers.

The fee rise comes hard on the heels of the abolition of the requirement to provide HMRC with detailed information about the assets and liabilities of a deceased person in many cases. Whilst this simplification would appear to be a blessing, it may cause difficulties when residential property is sold by executors, as Capital Gains Tax (CGT) may arise, and valuation evidence and advice may not be obtained at the right time.

CGT can often be reduced or eliminated altogether if it is considered early on. However, all too often, CGT is only considered after a property has been sold, when it is no longer possible to do anything about the liability that has arisen. Considering the position before exchange of contracts (the key date, where CGT is concerned) is absolutely essential. With a rate of tax of 28% and HMRC’s introduction of a 28-day deadline for filing a CGT online return on residential property sales, good advice and reliable valuation evidence is crucial to ensure that executors and beneficiaries can plan ahead and avoid paying unnecessary tax and penalties.

It is clear that simplification does not always make life simpler. These and other changes to the probate process will mean that executors will continue to need good, timely professional advice on how to deal with matters. There remain many, if not more, traps for the unwary in our ever-changing system.