Non Domiciled:

In his Budget speech, Mr Hunt said: “The Government will abolish the current tax system for non-UK domiciled individuals, to get rid of the outdated concept of domicile. We will replace the non dom regime with a modern simpler and fairer residency.” 

As it stands, those with non-dom status are able to earn money from abroad without having to pay tax to HM Revenue and Customers (HMRC) for up to 15 years. This is now being reduced from 6 April 2025 to four years, but after this period, those who continue to live in the UK will pay the same as everyone else.

Capital Gains Tax – cut

The higher rate of Capital Gains Tax (CGT) on property will be cut from 28% to 24% from April 2024 – firing up the residential property market and supporting thousands of jobs that rely on it.

National Insurance – cut

Following a 2 percentage point cut in the Autumn Statement, the main rate of Employee National Insurance will be cut again by a further 2 percentage points from 10% to 8% in April – a one third reduction in the main rate of National Insurance which means the average worker on £35,400 will receive a tax cut of over £900 compared to last year.

Following a 1 percentage point cut in the Autumn Statement, the main rate of Class 4 NICs for the self-employed will be cut by a further 2 percentage points from 8% to 6% from April – saving the average self-employed person on £28,000 over £650 compared to last year when combined with scrapping the requirement to pay Class 2 NICs announced at Autumn Statement.

British ISA

The new ‘British ISA’ has been unveiled pushing investment into exclusively UK assets allowing investors an additional tax free allowance of £5000.

ISAs, or Individual Savings Accounts, enable savers to invest £20,000 a year without paying tax on interest or returns.

The new British ISA, which will be introduced after a consultation into the implementation. 

Understanding the Basics:

A will is a legal document that outlines how a person’s assets should be distributed following their death. Having a clear and comprehensive will is essential to ensure that your partner is properly taken care of and that your wishes are respected.

In many jurisdictions, if there is no will in place, the law dictates how assets are distributed. In the UK, this falls under the Intestacy Rules. This default arrangement may not align with your intentions, particularly when it comes to non-traditional family structures. Therefore, a will allows you to have control over who inherits your assets, including your partner.

Choosing the Right Executor:

An executor is the person responsible for carrying out the wishes outlined in your will. When selecting an executor, consider someone you trust implicitly, as this role involves handling financial matters and ensuring the proper distribution of assets. It is crucial to discuss this decision openly with your partner and ensure they are comfortable with your choice.

Guardianship for Children:

For couples with children, clearly stating your preferences for guardianship in your will is vital. This becomes especially important for same-sex couples, as legal recognition and protection for non-biological parents may vary. Clearly defining your wishes can prevent potential disputes and ensure the well-being of your children.

Protecting Your Partner:

In many countries such as the UK, marriage equality has granted same-sex couples the same rights as heterosexual couples. However, it is essential to stay informed about local laws and regulations, as they can vary. With global mobility on the increase and many people moving abroad for work or other considerations, this may potentially affect one’s place of relocation. If marriage is not an option or does not provide sufficient protection, legal documents such as a will or power of attorney become even more critical.

Regularly Review and Update:

Life is dynamic, and circumstances change. It is advisable to review and update your will periodically, especially after significant life events like marriage, the birth of children, or the acquisition of new assets. Ensuring that your will reflects your current situation will help avoid complications going forward.

Conclusion:

In the pursuit of love and happiness, legal matters should not be overlooked. Same-sex couples, like any other, can benefit greatly from thoughtful will and succession planning. By taking the time to understand and navigate these essential legal steps, you not only safeguard your partner’s future but also ensure that your wishes are respected and your legacy is preserved.

Sherrards is part of an international alliance of legal and accountancy firms, Alliott Global Alliance, represented in 96 countries and we can connect you with advisers if you are looking to move abroad.

To find out more, contact Nicole Marmor. 

As part of The Sherrards Training Academy, we have asked our Legal Assistants and Trainee Solicitors to write articles to support their learning, and also to ensure they start to build on their own personal brand. This article has been fact-checked and proofread by Head of the Private Wealth department, Nicole Marmor.

Introduction:

In the realm of estate planning, Lasting Powers of Attorney (LPAs) hold equal significance to Wills as tools by which individuals can safeguard their autonomy and ensure their wishes are honoured.

The Powers of Attorney Act 2023 received Royal Assent on 18 October 2023 and signifies a milestone in the law surrounding LPAs. The legislation is poised to take effect in early 2024 and will usher in substantial changes to how LPAs are registered and safeguarded.

The Act comes in response to concerns surrounding complexities and inefficiencies permeating the current LPA system and aims to promote accessibility by enabling online registration.

What is a Lasting Power of Attorney?

An LPA is a legally binding document enabling the donor to designate a trusted person (or persons) as their legal representative. The attorney is authorised to act on the individual’s behalf in situations where they are unable to do so.

There are two types of LPAs, one pertaining to financial matters and the other to health and well-being. Many choose to have both in place. Both documents need to be registered in order for the attorney(s) to act. By registering a power of attorney, you ensure that you retain control over how your affairs are managed in the future, irrespective of your personal circumstances.

How will the Powers of Attorney Act change the current landscape?

The Act’s primary objective is to streamline the LPA process, making it more convenient whilst reducing the clerical errors traditionally associated with wet ink LPAs. LPAs will be able to be created and registered online which will (hopefully) significantly reduce the processing time.

Nevertheless, it’s not all ‘laissez-faire’ when it comes to the Powers of Attorney Act, considerable safeguards have been put in place with the aim of shielding vulnerable donors from potential fraud and abuse, attorneys are now being required to provide more comprehensive information regarding their relationship with the donor. Furthermore, to ensure compliance with these new measures the Office of the Public Guardian (OPG) has been granted increased authority to assess and challenge LPAs and a new criminal offense of LPA fraud has been introduced to fortify the measures.

Forecast for the future:

Cloudy with a chance of LPAs …

It is anticipated that there will be a surge in the number of people wishing to register an LPA due to the convenience of the digital registration process. Private Wealth solicitors are poised to play a pivotal role in facilitating this process, offering guidance on the recent amendments and potentially undertaking reviews of existing LPAs to ensure compliance with evolving legal standards.

The OPG is expected to provide online training specifically tailored to acquaint legal professionals with the new digital LPA registration process. Solicitors may consider integrating online resources and video conferencing services to streamline access to their LPA-related advice, adapting to the changing legal landscape to benefit their clients.

Inheritance tax

As a general rule assets of a deceased over the value of the nil rate band (currently £325,000) are chargeable at 40% inheritance tax.

The Acceptance-in-Lieu scheme (“AIL”)

Since 1910 the UK government has encouraged those administering estates, responsible for ensuring that the tax is assessed and paid, to consider offering works of art and important heritage objects to the nation in lieu of inheritance tax.

In addition to the advantage of being able to meet a tax liability in kind, the scheme offers a financial sweetener (known as the douceur) to provide an even greater incentive to make use of the scheme.

The criteria

The art or objects must be ‘pre-eminent’: in other words, of particular historic, artistic, scientific or local significance, either individually or collectively, or associated with a building in public ownership. A very wide range of objects is accepted each year as may be seen in the annual reports published by the Arts Council.

The art or objects must be in an acceptable condition.

The process

Offers must be made to the Heritage Team at HMRC. Those offers must be approved by the Secretary of State for Digital, Culture, Media and Sport (or the appropriate Minister in the devolved governments in Scotland and Wales) who is advised by Arts Council England’s AIL Panel. The AIL Panel consists of independent experts who seek specialist advice on the art or objects offered.

Key elements of any offer will be a valuation and justification for that valuation (generally independent opinion from more than one source is helpful); an explanation of why the object is considered pre-eminent; digital images and details of where the object can be inspected; evidence that the offeror has good legal title to the object (and details of its ownership between 1933-1945).

The douceur

In order to attract some of the finest works into national ownership the government offers a financial incentive to those administering estates. The sweetener consists of a 25% “cash-back” calculated against the inheritance tax that would normally have been due.

Example: Mr Gombrich’s estate contains an important Modern British work on paper. At date of death the piece was valued by an independent expert at £100,000. Mr Gombrich’s son is the sole residuary beneficiary and executor and decides to offer the painting in lieu of the inheritance tax liability of £40,000. The AIL Panel confirm the piece to be pre-eminent and agree a value of £100,000. The douceur is calculated as 25% of the inheritance tax due on the painting: 25% x £40,000 = £10,000. Gombrich junior receives £70,000 for the piece, the tax liability is cleared and the nation gains a pre-eminent work for the public to enjoy.

Conclusion

Every case will be different. The scheme offers an opportunity to make a not-insignificant tax saving whilst also having the benefit making the item(s) available for the appreciation of the general public. At the same time do bear in mind that there will be occasions when an item might achieve a better overall result (tax liability included) when sold on the open market (or indeed by a private sale). If you are considering your options I would be very pleased to advise.

Founded in 2006, Spear’s is a bimonthly British Magazine for ultra high-network individuals and for the people who advise them, focusing on the latest news surrounding wealth, business culture and luxury. 

Spear’s annually publish rankings on the top International Private Wealth advisers and service providers to high-networth individuals. These rankings are drawn from peer recommendations, feedback from clients, in-depth telephone and face-to-face interviews, data supplied by firms, as well as research conducted by the Spear’s editorial and research teams.

Nicole Marmor, Partner and Head of Private Wealth at Sherrards, was ranked alongside just four other “Top Recommended” International Private Wealth Lawyers for Probate and Wills for high-networth individuals in the UK. 

Nicole says “I am very grateful to the Spear’s team for the time and effort put in to be recognised as a top lawyer among so much talent. It is great to see a range of individuals showcased for their expertise and drive within the probate legal industry.”

If you would like to speak to Nicole, or a member of the Private Wealth department, please contact law@sherrards.com

To see the rankings on the Spear’s website, click here.

To see Nicole’s profile on Spear’s, click here. 

Abroo Khan, has now qualified from the Sherrards Training Academy and will be joining the Private Wealth team as a Solicitor.

Abroo has been a trainee with the firm now for just over two years, where she has been working alongside various departments, such as Commercial Property, Dispute Resolution, Corporate and Commercial, in order to grow her knowledge and understanding of the legal world.

Partner and Head of Private Wealth, Nicole Marmor, says, “It is brilliant news to have Abroo join our growing team. We have seen how hard she has worked throughout her time as part of the Sherrards Training Academy and we look forward to seeing her grow in her career with us.” 

With regards to our Trainee Solicitors,

Max Marmor joins the Commercial Property team as a Trainee Solicitor in London, after working alongside the Dispute Resolution team and  Commercial Property team as a paralegal for the past year.

We also congratulate Mike Jenkins who is promoted to Trainee Solicitor in the Commercial Property team in St Albans, after working alongside the team there for the past 10 months.

Lastly, we welcome Gabriel Cooke as a Trainee Solicitor to the Corporate and Commercial team in St Albans. Gabriel has been working alongside both the Employment, and Corporate and Commercial teams as a legal Admin Assistant for the past 7 months.

Sherrards Trainee Academy Partner, Michael Lewis says, “It is fantastic to see the Trainee Academy grow and see three excellent members of the team stay with us to begin their career as lawyers. We look forward to supporting them on their route to becoming Solicitors. I am also delighted that Abroo is qualifying with the firm after a highly successful training contract with us.”

We asked Prem Shergill, IFA at Grosvenor Wealth Management, to speak to us about how the Sherrards Private Client team supports her and her clients.

Prem kindly shares how her clients are often referred to our Private Wealth teams to help her clients to protect their assets.

She says “Everyone at Sherrards is very friendly, professional and full of knowledge and expertise.”

To find out more about Prem and Grosvenor Wealth Management, please click here.

We asked Anne-Maree Dunn, Client Partner and Head of Tax at WMT to sit down with us and talk about working alongside the teams at Sherrards. This comes as part of our client testimonial video project to showcase the Sherrards teams, the people we support and how we support them.

Anne-Maree advises business owners and individuals on tax opportunities and challenges and works closely alongside many of the team from Sherrards including our Corporate and Commercial, Commercial Property, Employment, Residential Property and Private Wealth teams.

These videos were filmed by Pearldrop Video Production at The Hub on Verulam.

To find out more about WMT and Anne-Maree Dunn, click here.

If your children are under the age of 18, have you thought about who should care for them if both parents passed away?

According to research, seven out of ten parents in the UK parents do not have a legal guardian in place to care for their children in the event of their deaths.

If both parents with parental responsibility die and a guardian is not appointed in the will, then the courts will decide who looks after your children. There is no guarantee the court will appoint the person or people you would have chosen as guardians, so it is important to make the decision yourself.

Whilst a mother automatically has parental responsibility, unless the father is married to the mother, listed on the birth certificate, or a has court order bestowing parental responsibility on him, he will not automatically become the legal guardian if the mother dies.

A common misconception is that any children will automatically go to grandparents. This is not the case.  In the absence of a will appointing the grandmother/ grandfather as guardian, it may be necessary to apply to court to formalize this appointment. In some scenarios, there is even the risk that children are taken into care while guardianship is clarified.

Additionally, while godparents can have a crucial role in the lives and upbringing of children, they have no legal rights in respect of children in the event that their parents die. If you wish your children’s godparents to also be their legal guardians, you should ensure such an appointment is made by will.

Deciding who the guardian(s) should be is a difficult decision, so when appointing the guardian(s) here are some things to consider:

• Do your children know the guardians? If so, what is their relationship like?
• Do the guardians have the financial ability to raise your child if your estate cannot cover all the costs?
• Do the guardians have similar beliefs, values, and outlook in life as you do?
• Where do the guardians live?
• What are the guardians ages?
• Are the guardians likely make similar decisions to those that you would have made yourself for your children?

Also bear in mind, if each parent appoints different guardians the guardians must agree on decisions relating to the children, and if they can’t, it will be for the court to decide.

Finally, it is worth noting that your chosen guardians do not have to accept the appointment, so it is important that you discuss it with them, and they accept the responsibility, before appointing them.  However, providing your guardians are willing to accept the guardianship, you’ll have peace of mind you have done as much as possible to protect your children, even if you’re no longer around.

In October 2020, amendments to the Money Laundering Regulations came into force introducing new rules extending the scope of The Trust Register (TRS) so that it applies to a wider range of trusts, both based in the UK and some non-UK Trusts regardless of whether or not the trust is liable to pay tax.

Relevant trusts must register with TRS if they are liable to UK taxation in any year.

Although estates themselves are not subject to registration, in some instances Personal Representatives will need to register the estate, for example, if they are selling property worth £500,000 or more. Bearing in mind local property prices, many Personal Representatives may be caught and may be unaware of their obligations.

There are deadlines for registration of new and existing trusts; for existing non-taxable trusts that have not yet been registered this is 1 September 2022.

Trustees are also required to ensure the TRS is kept up to date, and again there are deadlines for doing so.

Types of trusts

The most common type of trust that needs to be registered is an “express trust”. These include bare trusts, discretionary trusts, interest in possession trusts (if created on death they are excluded from registration for two years as with other will trusts), protective trusts, pilot trusts (often set up to receive pension benefits) created before 6 October 2020 containing more than £100, and pilot trusts created after 6 October 2020 regardless of amount held. 

Charitable trusts and Child Trust Funds do not have to register.  Bereaved minor trusts and statutory trusts (created on an Intestacy) do not have to register as an express registrable trust but may have to register if they have a UK tax liability.

For trusts relating to land, eg where two or more people have bought a property together, where the Trustees and Beneficiaries are the same people, there is no requirement to register.  However, if there is a Declaration of Trust in place and the Trustees/Legal Owners of the property are not the same as those with a beneficial interest then the trust is required to register. 

This may occur where a third party has lent monies to assist with a property purchase and wishes to protect their investment, or, for example, children have assisted their parents to purchase a property under the Right to Buy Scheme.

Excluded trusts

Trusts for retirement policies are excluded from registration during the lifetime of the person assured provided that the policy only pays out on their death, terminal illness, critical illness or permanent disablement, or to meet the cost of healthcare services.

Information required

The information required by the TRS can be submitted online and the type of information required depends on whether the Trustees and Settlors (the person or people creating the trust) are individuals or a business or organisation, such as a charity.

Trusts with a UK tax liability need to provide more extensive information, including details of the trust assets as part of the annual tax return. 

There are penalties for failing to provide the information required by the appropriate deadlines.  However, given difficulties with both registering new trusts and updating the register, and a recognition that the last tax year was the first year that trustees have been able to meet their obligations, HMRC had indicated that they will not automatically be charging penalties. However, it is not clear how long this honeymoon period will last.-HMRC has certainly not been lenient on penalties in relation to late reporting of capital gains on UK properties.

If you are the Trustee or Settlor of a trust created at any time or you are dealing with an estate especially one where there is a property to be sold, and you are uncertain as to whether the new rules apply to you, please contact Sherrards and our trust experts will be happy to guide you in the right direction.

To find out more, please contact Private Client Partner Nicole.