This article was originally published in EPrivateClient and can be accessed here.
Aligning probate fees – a question of access, affordability and adequacy
On 8 July 2021, the Ministry of Justice (MoJ) published its open consultation which seeks views on whether to align the fees for grants of probate into a single fee that is set at cost recovery.
To quote the MoJ, the headline objectives of this proposal are threefold:
- remove the unjustified discrepancy between fees for professional and non-professional applicants for probate. This would bring the fee structure into alignment with HM Treasury’s Managing Public Money, where all users should pay the same fee for the same service.
- ensure that the fee recovers the cost to Her Majesty’s Courts and Tribunals Service (HMCTS) of delivering the service.
- protect access to justice by ensuring that courts and tribunals are adequately resourced, while reducing the overall taxpayer subsidy for HMCTS.
Currently a fee of £155 is payable for probate applications made by professionals and £215 for applications made by individuals. The fees apply to estates worth £5,000 or more. When these fees came into force all applications were in paper form. The difference in fees may have been primarily because the individual applicant had to appear in person to swear the oath. Moreover, individual applicants not familiar with the information and steps required could have meant professional applications were more readily compliant and processible resulting in less HMCTS resources being utilised. The discrepancy between the probate fee may therefore have been justified.
However, from 2017 individual applicants were invited to submit probate applications online, a step designed to give executors more control over a more streamlined service, and from November 2020 it became a requirement for all professionals making probate applications where there is a will to use the online service.
These changes, which continue to be developed, signify a considerable overhaul of the processes involved for both types of applicant. If changes neaten the processes for both, then arguably the consequence is that there is less room for error on the part of the individual applicant. In turn this could narrow the disparity between the two types of application.
Chapter 6 of HM Treasury’s Handbook Managing Public Money states that different charges can apply to different categories of service if there are “structural differences, where it costs more to supply some consumers” but goes on to say that “different groups of customers should not be charged different amounts for a service costing the same“.
With the consultation proposing a flat fee of £273 for both professional and individual probate applications, it seeks to remove what could now be considered an unjustified discrepancy between differing fees being charged for the same service.
This is a drastic change from the MoJ’s 2019 proposals, when it was suggested probate fees be increased depending on the value of the estate. This was irrespective of the level of service being provided by HMCTS, which is the same for all estates, regardless of value. Critics of the 2019 proposals considered the fees, which would have reached £6,000 for estates worth over £2,000,000, a form of taxation and unfair. Many may consider the present consultation, offering a flat fee, as much welcomed news in comparison to what had previously been proposed.
The consultation explains the most recent cost recovery exercise undertaken by the MoJ found that whilst the cost of providing the service has been found to have increased, the divergence in cost between processing professional and non-professional applicants has substantially diminished.
As described in the consultation, the findings of the MoJ’s cost recovery exercise showed that in 2018/19, the unit of processing probate applications was £260 for a legal professional and £265 for a personal application, which in effect amounted to a public subsidy by the taxpayer. The consultation goes on to explain the average unit cost was assessed as £262 (£273 when inflated to 2021/22 prices).
It will be interesting to learn the outcome of future cost recovery exercises as the online service continues to develop for both types of application and whether the cost of providing the service will continue to increase. The MoJ will no doubt monitor the outcome closely to ensure it “neither profits at the expense of consumers nor makes a loss for taxpayers to subsidise” to quote HM Treasury’s Handbook Managing Public Money.
Over the last year and half, coinciding with the pandemic, applicants have been subject to delays with the probate service and indeed some of these problems may have stemmed from teething problems with the new digital service. The day after the consultation opened, The Law Society published an article Proposed rise in probate fees unjustifiable as users face long delays. Law Society president I. Stephanie Boyce said “the MoJ’s persistence of raising fees in the probate service is worrying, particularly when there are continued and significant delays to the probate service”. In order to justify the increase in fees, HMCTS will therefore need to demonstrate they are protecting access to justice by ensuring a more efficient and timely level of service is provided, not least that the online service is working and capable of delivering a better service than before.
Given the current issues with the probate service, it is vitally important to get applications right, so here are some top tips:
Individual administrators and executors will need to:
- Have the original death certificate or an interim death certificate.
- Have the original will if you are an executor.
- Report the estate’s value and, if Inheritance Tax (IHT) is due, submit an IHT account to HM Revenue & Customs (HMRC) 20 working days before applying for probate.
- Be aware extra copies of the grant cost £1.50 each. An executor or administrator may want to order several copies so as to enable them to send them to different organisations at the same time.
- Apply for probate online via Gov.uk.
Professional applicants should be aware:
- HMCTS published a letter on 19 July 2021 outlining improvements to the digital service.
- HMCTS is encouraging users to check their MyHMCTS dashboard and either submit cases or read the guidance on deleting unsubmitted cases for those that are no longer valid.
- Before applying for the grant through MyHMCTS, 20 working days must have passed since sending the IHT400 and IHT421 form to HMRC.
- The IHT421 is sent direct from HMRC to the probate service and whilst this should happen within two weeks, HMRC won’t always notify applicants.
- The probate service now has a webchat service.
The consultation is open until 23 September 2021. Subject to the outcome of the consultation, the new fee structure will be introduced in early 2022.