Practising certificate and periodic fees

23 June 2017

The below information relates to the 2017 practising certificate renewal exercise.

Read information regarding fees payable when setting up a new firm.

Individual fees

Every solicitor seeking a practising certificate (PC) and every European (REL) or foreign lawyer (RFL) seeking to register is required to pay an annual fee.

Practising certificates

The practising certificate renewal fee for 2017/18 is £318.

This includes the regulatory fee of £278 and a compensation fund contribution of £40

For practising certificates issued part way through the year the fee will be pro-rated.

January – March £261
April – June £203
July – October £146

Each of the above fees includes a compensation fund contribution of £40.

Registrations

The registration renewal fee for registered European and foreign lawyers for 2017/18 is £318.

This includes the regulatory fee of £278 and a compensation fund contribution of £40

For registrations issued part way through the year the fee will be pro-rated.

January – March £261
April – June £203
July – October £146

Each of the above fees includes a compensation fund contribution of £40.

Reduced fees

You are entitled to a reduced fee if you are on maternity leave (or equivalent) or have been during the 2016/17 practising year. The fees are reduced to:

October - December £203
January – March £174
April – June £146
July – October £117

Each of the above fees includes a compensation fund contribution of £40.

The registration fee for RFLs based at an office outside of England and Wales is £140. This is a regulatory fee of £100 and a compensation fund contribution of £40.

All above fees include an application handling fee of £48. Dates ranges quoted apply to the date that the PC is issued.

All practising and registration certificates will be issued with an expiry date of 31 October 2018.

Compensation Fund

Each practising certificate or registration fee contains a contribution to the Compensation Fund. This does not include Crown Prosecutors who are exempt from making the contribution. If you need to request an exemption please contact us.

The fees below are indicative pending final approval from the Legal Services Board.

Firm periodic fees

Every authorised body must pay an annual periodic fee.

To calculate the 2017/18 periodic fee, we will take the turnover figure declared on the 2016/17 application which will be based on the last closed accounts prior to 31 October 2016 (e.g. Apr 2015 – Mar 2016).

Calculate your firm's fee

Fee bands

The periodic fee is calculated using this table and the formula:

Fee = (T - C) x B + D

Turnover Band (T) Turnover Range (A) Pay %* of Turnover within band (B) Minimum Turnover in band (C) Minimum Fee in Band (D)
A £0 - £19,999 0.72% £0 £100
B £20,000 - £149,999 0.42% £20,000 £244
C £150,000 - £499,999 0.41% £150,000 £790
D £500,000 - £999,999 0.40% £500,000 £2,225
E £1,000,000 - £2,999,999 0.37% £1,000,000 £4,225
F £3,000,000 - £9,999,999 0.25% £3,000,000 £11,625
G £10,000,000 - £29,999,999 0.22% £10,000,000 £29,125
H £30,000,000 - £69,999,999 0.20% £30,000,000 £73,125
I £70,000,000 – £149,999,999 0.18% £70,000,000 £153,125
J £150,000,000 + 0.07% £150,000,000 £297,125

*percent is equivalent to divided by 100" (eg 0.72% = 0.0072)

Example

A firm with turnover of £200,000:

(£200,000 - £150,000) x 0.0041 + £790 = £995

Overseas branches

An additional fee of £200 will be payable for each branch office outside England and Wales.

Compensation Fund

Every authorised body that has held or received client money during the period 1 November 2016 to 31 October 2017 must make a contribution of £778 to the compensation fund along with their periodic fee.

For new firms, the compensation fund fee is payable if the firm intends to hold or receive client money during the 2017/2018 practising year.

Client money is as defined in the SRA Accounts Rules 2011. If you have queries regarding the definition of client money, please speak to our Professional Ethics Guidance team.

New firm fees

For details of the cost of authorisation of a new firm, please see the Firm Based Authorisation page.

Turnover explained

What is turnover?

Turnover refers to a firm's total gross fees arising from work undertaken from offices in England and Wales.

Which turnover figure is used for the periodic fee?

To calculate the 2017/18 periodic fee, we will take the turnover figure declared on the 2016/17 application which will be based on the last closed accounts prior to 31 October 2016 (e.g. Apr 2015 – Mar 2016).

We will use closed accounts where possible. A firm has until 31 August 2017 to notify us if their turnover figure has changed.

What if my firm is a new firm?

For firms authorised during the 2016/2017 practising year, we will use the first twelve months' estimate.

What if my firm is a successor firm?

Where a firm's entity or structure has changed during the practising year, we will use the turnover figure provided when we were notified of the change.

We consider a firm's entity or structure to have changed where there is, for instance, a merger, acquisition or split.

Which figure do I need to provide in this year's application?

You will need to provide the most recent turnover figure available. The figure should cover a 12 month period prior to 1 November 2017. For instance, 1 February 2016 - 31 January 2017.

Please note, the turnover figure provided in this year's bulk renewal application will be used to calculate next year's periodic fee.

What should I do if my turnover figure is an estimate?

If the figure you are going to provide is an estimate, we will accept this. You can contact us at a later date once you have received the closed accounts.

Definitions

Closed accounts

Closed accounts are defined, in order of preference, as:

  • an audited set of financial statements
  • an unaudited set of financial statements signed off by an accountant
  • a submitted tax return for the year.

Gross fees

Gross fees includes:

  • all professional fees of the firm including remuneration, retained commission, and income of any sort whatsoever of the firm (including notarial fees). Work in Progress (WIP) should be included.

Gross fees does not include:

  • interest, reimbursement of disbursements, VAT, remuneration from a non-private practice source, dividends, rents, and investment profit.

Successor turnover

Successor turnover is relevant where firms have changed through, for example, an acquisition, merger or split. Certain firms affected are required to submit a notice of succession to the SRA with an agreed apportionment of turnover among the affected firms.

As guidance, successor turnover should be calculated based on the turnover figures for each of the affected firms.

If a firm has succeeded to the whole or a part of one or more firms (e.g. through merger or acquisition), successor turnover will be calculated by combining the appropriate proportion of the turnover figure for each of the affected firms which has become part of the successor practice:

  • In a simple merger between firms A and B, combine the turnover figures for each firm.
  • In a merger of one firm (firm A) with part of another firm (e.g. one third of firm B), firm A should add the corresponding proportion of firm B’s turnover figure to its turnover figure (e.g. firm A’s turnover figure + third of firm B’s turnover figure)

For a firm which has split or ceded part of their practice to another firm and wishes this change to be reflected in a successor turnover figure, the successor turnover figure will be a proportion of the turnover figure, as long as it is clear how the turnover figure for such a firm is to be distributed between the successor firms. 100 percent of the turnover figure must be accounted for between the successor firms. For example:

  • In a merger of firm A with one third of firm B, firm B’s successor turnover figure will be two thirds of its turnover figure, Firm A’s will be its turnover figure plus one third of B’s turnover figure;
  • Where firm A and one third of firm B become new firm C, firm A’s turnover will be £0 (closed) and B’s turnover will be two thirds of its turnover figure. Firm C’s successor turnover figures will be the combination of A’s turnover figure and one third of firm B’s.

In a case where all successor firms agree in the notice of succession on the apportionment of 100 percent of the turnover figures, then the SRA will accept the successor turnover figures.

In the case where all successor firms are unable to agree the apportionment of 100 per cent of the turnover figures, then the SRA will treat the notice of succession as an application for it to determine the turnover figures for the purpose of determining renewal fees. The SRA will determine this apportionment based on the information available and its decision will be final. Firms will not be able to renew recognition without an appropriate successor turnover figure being determined, as this is necessary to calculate the appropriate firms’ fees.

Total funding requirements

The net total regulatory funding requirement for 2017/18 is £98.6m.

Additionally, we will collect approximately £11.1m for the Compensation Fund.

What do your fees pay for?

The income from practising fees can only be used for certain purposes.

These are:

  • regulatory activities (the total costs of the SRA),
  • non-regulatory activities provided by the Law Society which are Permitted Purposes under the Legal Services Act (e.g. Law reform activities),
  • levies required to be paid under the Legal Services Act,
  • part of the cost of the Legal Services Board (LSB),
  • part of the costs of the Legal Ombudsman,
  • full cost of the Solicitors Disciplinary Tribunal (SDT).

All of these costs make up the total funding requirement which is met by regulated individuals and firms.

How we spent your fees in 2016-17

Staff costs 43%
Disciplinary legal fees 11%
Interventions 8%
Other costs, such as office expenses and research programmes 21%
Services we share with the Law Society, for example HR and Finance 11%
Projects, such as the renewal of practising certificates 6%

The SRA adopted a set of eight principles for setting fees in any year in 2010, they are to:

  • be fairer to fee payers
  • be efficient and economical to administer
  • ensure a predictable income to meet the cost of regulation
  • be stable - charges should not vary considerably year on year
  • be as simple as possible - to enable the regulated profession to predict their likely fees
  • be based on data that can be verified
  • ensure that, where possible, the costs of processes that are not of general application should be borne by those making such application, as far as possible, on a cost recovery basis
  • take some account of ability to pay, in particular in relation to small and new businesses, charitable and not-for-profit organisations, and not be a deterrent for new entrants

The current split for determining fees is

  • a 60/40 Firm/Individual split of practising fees
  • a 50/50 Firm/Individual split of compensation fund contributions
  • maintaining the maternity leave discount on practising certificates

What happens now?

The figures on this page represent the proposed budget for 2017-18. It has not yet been approved.

The approval process is:

  • The Law Society Council will approve the budget itself on Wednesday 5 July
  • Our Board will approve the way the budget is collected on Wednesday 12 July
  • The proposals will be submitted to the Legal Services Board, which will aim to make a decision in mid August
  • Renewals for 2017-18 will then start on 1 October

Feedback

If you have any comments to make to the SRA on the fee-setting process, please contact us.

Fee policy

The annual practising fees are set with agreement from the Legal Services Board under Section 51 of the Solicitors Act 1974.

Feedback

If you have any comments to make to the SRA on the fee-setting process, please contact us.