Inheritance tax and probate court fees: What you need to know

PUBLISHED: 13:24 21 September 2016 | UPDATED: 10:15 05 October 2016


A change to inheritance tax that will save beneficiaries thousands of pounds could be offset by a proposed hike in probate court fees

From 6 April 2017 the much heralded £1million inheritance tax (IHT) nil rate band comes into effect (well, nearly!). It will apply gradually over successive tax years resulting in the crowning £1million exemption for spouses’ estates by 2020. It will apply when your house is left to your children and would raise the threshold from the current £650,000 before IHT is charged at 40% on an estate.

But the potential IHT savings would be dampened if a proposal to dramatically raise the court fee for obtaining a Grant of Representation is made law. A Grant of Representation is required in many deceased estates especially where there is a property or stocks and shares. Currently the court fee for lawyer applications is a flat fee of £155 plus 50p for each copy required, for any estate worth £5,000 or more.

The Government’s proposal is to introduce a sliding scale of court fees based on the value of an estate. The good news is that any estate worth up to £50,000 would pay no fee at all. However, an estate worth between £300,000 and £500,000 would pay a £1,000 fee, an estate between £500,000 and £1 million would pay £4,000, between £1million and £1.6million would pay £8,000, while an estate worth £2million or greater would suffer a £20,000 fee. The cost would be deductible from the estate.

Further, the finer detail of the IHT £1 million allowance may leave some with high value estates not benefiting. For example, if your estate is worth over £2million then the additional allowance is tapered away such that if an estate is worth £2.35million or more, then the whole allowance is lost. Also, if your Will contains a trust for your children then you should get it reviewed because some trusts will prevent the top-up applying.

For more information on these changes and how they could affect you please contact:

Susan Glenholme, Partner

Debenhams Ottaway

T: 01727 735636



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