Category: Articles

Discretionary Will Trusts

Posted on by Wellers

When planning your estate, understanding the different types of trusts available can help you make informed decisions about your family’s financial future. Discretionary will trusts offer flexibility and control, but it’s important to understand how they work and their tax implications.

What is a discretionary will trust?

A discretionary will trust is the most flexible form of trust available. It enables trustees to use and distribute the income and capital entirely at their discretion – they have complete control over who receives what and when.

This flexibility makes discretionary trusts particularly valuable when:

  • You’re uncertain about future family circumstances
  • You want to protect assets for vulnerable beneficiaries
  • Family members have different financial needs
  • You need to respond to changing tax laws
  • There’s a risk of divorce or bankruptcy affecting beneficiaries

How does a discretionary trust work?

In any trust arrangement, there’s a separation between legal ownership and who actually benefits from the assets. The trustees hold legal title to the assets but cannot benefit personally. Instead, they must manage the trust property for the beneficiaries’ benefit, following the instructions in the trust deed.

For discretionary will trusts specifically:

  • The trust is created when the person making the will dies
  • Trustees have full discretion over distributions
  • No beneficiary has an automatic right to income or capital
  • Trustees can respond to changing family circumstances
  • The trust offers protection from beneficiaries’ creditors or divorce proceedings
  • Professional trustees can be appointed alongside family members

Discretionary will trust inheritance tax

Understanding the inheritance tax implications of discretionary trusts is crucial for effective estate planning.

Initial inheritance tax position

If you leave your entire estate to a discretionary trust, this creates a chargeable transfer for inheritance tax purposes – even if your spouse is a beneficiary. The whole estate is subject to inheritance tax at 40% above the nil-rate band.

However, there’s an important two-year window that offers significant planning opportunities. Any distributions from a discretionary will trust within two years of death are treated as if made by the deceased in their will. This means:

  • No exit charges apply during this period
  • Distributions to exempt beneficiaries (spouse/charity) can trigger inheritance tax refunds
  • You can effectively rewrite the will through trust distributions
  • Family circumstances can be reassessed after death

Ongoing inheritance tax charges

After the two-year period, discretionary trusts face two types of inheritance tax charge:

  1. Ten-year anniversary charges: Up to 6% on the trust value above the nil-rate band (currently £325,000)
  2. Exit charges: Proportionate charges when capital leaves the trust (income distributions remain exempt)

The actual rates depend on the settlor’s inheritance tax history and any other trusts they created. These charges, while significant, are often outweighed by the protection and flexibility the trust provides.

Discretionary will trust taxation

Discretionary trusts face specific tax treatment that differs from individual taxation:

Income tax rates:

  • First £1,000 of income: 20% (non-savings) or 7.5% (dividends)
  • Income above £1,000: 45% (non-savings/interest) or 38.1% (dividends)
  • No personal allowances available
  • Trust expenses can reduce taxable income

Capital gains tax:

  • Annual exemption: £6,150 (half the individual allowance)
  • Tax rate: 20% or 28% for residential property
  • Holdover relief may be available on certain distributions

Is a will trust a discretionary trust?

Not all will trusts are discretionary trusts. Your will might create different types of trust, each with distinct features:

  • Life interest trusts: Beneficiary entitled to income for life
  • Bereaved minors trusts: Specific tax advantages for children
  • Disabled persons trusts: Special tax treatment for vulnerable beneficiaries
  • 18-25 trusts: Lower inheritance tax charges for young adults
  • Fixed interest trusts: Predetermined beneficial interests

Discretionary trusts offer maximum flexibility but may not suit every situation. We can help you choose the right trust structure for your family’s needs.

Advantages of a discretionary will trust

Discretionary will trusts offer significant advantages that make them valuable estate planning tools for many families:

  • Maximum flexibility: Trustees can adapt to changing family circumstances, financial needs, and tax laws without needing to alter the will
  • Asset protection: Trust assets are protected from beneficiaries’ creditors, divorce settlements, and bankruptcy
  • Vulnerable beneficiary safeguarding: Ideal for beneficiaries who may struggle with money management due to age, disability, or addiction
  • Tax planning opportunities: The two-year window allows post-death tax planning and potential inheritance tax savings
  • Generation-skipping: Assets can be preserved for grandchildren while supporting children if needed
  • Privacy: Trust distributions remain private, unlike outright inheritances through probate

These benefits are particularly valuable for:

  • Blended families with complex dynamics
  • Families with beneficiaries at different life stages
  • Estates where business assets need protecting
  • Situations where mental capacity is a concern
  • International families with cross-border considerations

The flexibility to respond to unforeseen circumstances often outweighs the additional complexity and costs involved.

Disadvantages of a discretionary will trust

While flexible, discretionary will trusts have some drawbacks to consider:

  • Complexity: Require ongoing administration and tax compliance
  • Costs: Professional fees for trustees, tax returns and advice
  • Tax rates: The trust pays up to 45% tax on income, compared to 20-45% for individuals
  • No entitlement: Beneficiaries cannot demand distributions
  • Ten-year charges: Ongoing inheritance tax exposure
  • Limited reliefs: Some capital gains tax reliefs unavailable

These disadvantages must be weighed against the protection and flexibility offered, particularly for complex family situations.

Tax treatment for beneficiaries

When beneficiaries receive income from a discretionary trust, it comes with a 45% tax credit regardless of the trust’s actual tax position. This creates opportunities:

  • Basic rate taxpayers can reclaim overpaid tax
  • Non-taxpayers receive substantial refunds
  • The trust maintains a “tax pool” to track available credits
  • Careful timing of distributions can maximise tax efficiency

For capital distributions, beneficiaries generally receive assets at market value with no immediate tax consequences for them.

Key considerations for discretionary will trusts

Before choosing a discretionary trust, consider:

Family circumstances: Are there vulnerable beneficiaries needing protection? Will family dynamics change?

Estate size: Will ten-year charges significantly impact the trust value? Is the estate large enough to justify ongoing costs?

Trustee selection: Who will make these important decisions? Should you appoint professional trustees?

Letter of wishes: How will you guide trustees without legally binding them?

Professional advice: Complex rules require expert guidance throughout the trust’s life

How Wellers can help

Our experienced private client team understands the complexities of discretionary will trusts and can guide you through every step of the process.

We offer:

  • Initial consultations to assess whether a discretionary trust suits your needs
  • Expert drafting of wills incorporating trust provisions
  • Ongoing trustee services and administration support
  • Tax planning advice to minimise inheritance tax exposure
  • Clear, fixed-fee pricing for transparency

Our STEP-qualified solicitors have extensive experience in:

  • Complex estate planning for high-net-worth individuals
  • Multi-generational wealth preservation
  • Family business succession planning
  • International trust structures
  • Charity legacy planning

Next steps

Discretionary will trusts offer valuable flexibility for estate planning, but their complexity requires careful consideration and expert advice. Our experienced trust solicitors can help you understand whether a discretionary trust suits your circumstances and guide you through the setup process.

For confidential advice about discretionary will trusts or to discuss your estate planning needs:

Call us: 020 3994 4988
Email: wellers.wealth@wellerslawgroup.com

Choosing the Right Trust

Posted on by Wellers

How different types of trusts work?

There are a number of different types of trusts.  Given the regularity with which I am asked what type of trust is best for a given situation I have provided a brief definition of some of the key types, setting out their advantages and disadvantages and briefly referring to their tax treatment. 

Bare Trust

This is the simplest form of trust.  It consists of one or more trustees and one or more beneficiaries. Some have described it as a half-way house between a full trust and outright ownership. 

The beneficiary has an immediate and absolute right to both the capital and income of the trust at 18 years of age provided they have sufficient mental capacity. 

The assets of the trust are held in the name of the trustee or trustees but the trustee has no discretion over the assets held in trust.  The trustee of the bare trust is a mere nominee in whose name the property is held.  Except in the case of bare trusts for minors, the trustee has no active duties to perform.  The trustee must simply follow the instructions of the beneficiary provided they are lawful, in relation to the assets held in trust.   A bare trust can be express or implied by conduct. 

There can be more than one beneficiary provided each beneficiary is absolutely entitled to their share of the trust’s assets.  The trustee has no discretion to change the shares or to use the income from one beneficiary’s share to benefit another beneficiary.

It is straightforward to administer which keeps running costs down and  there is no limit on the number or amount of assets held by the trust and it can hold any kind of asset.

Advantages

Bare trusts are useful vehicles to pay for school fees since the amount can be estimated in advance and only that amount put into the trust.  Often this is a vehicle used by grandparents to pay for grandchildren’s school fees, since once gifted into the trust the sum falls outside of the grandparent’s estate after seven years and they are not taxed on the income of the trust, which parents would be if they had settled the money into a bare trust. 

Disadvantages

The lack of control for the trustees.  They do not have a discretion.  The beneficiary is entitled to take control of the trust fund as soon as they reach 18 years of age and to demand that the assets are put in their names, provided they have mental capacity. The age that the beneficiary becomes entitled to the trust assets is always 18 years of age and this cannot be altered.  The assets in the trust are not ring fenced against creditors of the beneficiary and on the death of the beneficiary will form part of their estate for Inheritance Tax purposes.  

The bare trust is a rigid structure.  Once established the beneficiaries and their share of the trust assets cannot be changed.  No future beneficiaries can be added as the trust has been set up absolutely for the named beneficiaries and this cannot be reversed. A gift to the bare trust is irrevocable and therefore cannot be undone once executed.

It is not a recommended vehicle for large sums of money since the beneficiary will have full access at 18 years of age.

Taxation of bare trust

Income Tax

Except where a parent has settled money into bare trust for a minor, the income received by a bare trust is taxed at the beneficiaries’ marginal rate of tax.  It is treated as if the beneficiary had received it directly themselves. 

If parents have set the trust up, then any trust income over £100 is taxed at the parents’ marginal tax rate as if they had received the income.  This would not be the case for grandparents, as explained above.

Capital Gains Tax

A gift into a bare trust would be a deemed disposal for Capital Gains Tax purposes and to the extent that the then market value exceeded the original acquisition cost and any enhancement expenditure, Capital Gains Tax would be charged on the notional gain on the beneficiary. 

Just as above, gains realised by the trustees are treated as if they were realised by the beneficiary and it is the beneficiary’s annual exempt amount that would be available to offset any gains.  

Inheritance Tax

The assets of the bare trust are in the beneficiaries’ estate and will be subject to Inheritance Tax on their death.  Just as with any other gift, if you make a gift into a bare trust you need to survive 7 years for the value of that gift to fall outside of your estate for Inheritance Tax purposes. This is the case where the beneficiary is not also the settlor of the trust funds into trust (i.e. the person gifting the money into the trust). The rules are different for settlor interested trusts    

Discretionary trust

The definition of a discretionary trust is one where none of the beneficiaries has a present right to present enjoyment of the income generated by the trust property.  The trustees have a discretion as to how to apply the trust capital and the income of the trust as it becomes available.  The trust will contain a definition of the class of beneficiaries on whose behalf the trustees hold the trust property but it is up to the trustees to decide how much is paid, how often payments are made and to whom.

As no individual beneficiary can claim the income or capital as of right, such a beneficiary has a mere hope (to be distinguished from a right) that the trustees will at some time exercise their discretion in his or her favour. 

The right of the beneficiary under a discretionary trust, subject to the terms of the trust, is to be considered by the trustees in the exercise of their discretion whether to appoint income or capital and, indeed how much.

Advantages

Discretionary trusts are useful if the settlor is unsure about which of the beneficiaries will need help in the future and in what proportions.  They are also useful as asset protection vehicles because none of the beneficiaries have an enforceable right to the assets of the trust, nor do their creditors. 

Discretionary trusts are useful in estate planning to benefit members of the family in the event of an unexpected death. Property within the trust is exempt from creditors.  A creditor cannot take trust property in bankruptcy or liquidation (unless the debt was originally a trust debt). An exception to this will be where a settlor gifts assets into trust to prevent known creditors accessing funds. In these circumstances if it is established that the act of settlement was done to defraud creditors, the trust can be set aside via litigation.

This type of trust, if properly managed, can be a very tax efficient structure.  There is freedom to implement tax planning after the trust has been set up in response to the changing circumstances of the beneficiaries.

Discretionary trusts allow the settlor of the trust funds to outline how they wish the trust fund to be used, during their lives and thereafter.  The settlor’s wishes are not legally binding, but are useful guidance to the trustees.  If professional trustees are used, the settlor may have the peace of mind that their wishes will be complied with, since there would be no conflict of interest, as there may be between a trustee who is also a beneficiary. 

In terms of flexibility, the trustees can respond to changing family circumstances easily due to the control they have over the use and distribution of assets held by the trust because of the discretion they are given under the terms of the trust. 

Disadvantages

This trust is more costly to administer.  The services of accountants and lawyers may be required to submit trust tax returns and for trust documentation to be drafted.  For example, for every distribution to beneficiaries there must be Deeds of Appointment drafted.

Only profits, not losses are distributed to beneficiaries. 

Taxation

The funds fall fully outside of the settlor’s estate after seven years.  The funds within the trust fund fall within the relevant property regime.  In broad terms, ‘relevant property’ is property that is not comprised in the estate of the settlor or a beneficiary.  In order to ensure that such assets are not therefore outside the scope of Inheritance Tax, relevant property is subject to exit and principal charges.  These principal charges fall due on the tenth anniversary of the creation of the trust.  The assets within the trust are revalued and a tax charge of 6% of the excess in value above the then nil rate band is charged to Inheritance Tax and paid at that point.  In simple terms, this is repeated every ten year anniversary and/or on exit of the asset from the trust fund. 

Trustees are responsible for paying tax on income received by discretionary trusts.  The first £1,000 is taxed at the standard rate. 

If the settlor has more than one trust, this £1,000 is divided by the number of trusts they have.  However, if the settlor has set up five or more trusts, the standard rate band for each trust is £200. 

The tax rates are below:

Trust income up to £1,000

Type of incomeTax rate
Dividend type income7.5%
All other income20%

Trust income over £1,000

Type of incomeTax rate
Dividend type income38.1%
All other income45%

Trustees do not qualify for the dividend allowance.  This means trustees pay tax on all dividends depending on the tax band they fall within.

Interest in possession trusts/life interest trusts

The interest in possession trust is often referred to as a life interest trust or a fixed interest trust.  In its simplest form, the beneficiary (or life tenant) is entitled to the net income from the fund in which he has an interest (after the trustees have deducted expenses properly incurred by them in the exercise of their management powers) for the rest of his life or for a fixed period.

On the death of the life tenant, the right to trust income will pass to another if the trust document provides for this or will end with the distribution to the capital beneficiaries or become part of a discretionary trust. 

Interest in possession trusts created during the lifetime of the settlor before March 2006 were potentially exempt transfers.  Inheritance Tax was only chargeable if the settlor died within seven years of setting up the trust. 

The Finance Act 2006 made significant changes to the Inheritance Tax treatment of interest in possession trusts.  These changes took effect from 22 March 2006.  Since 22 March 2006, if an individual creates an interest in possession trust during his or her lifetime the transfer comes within the relevant property regime, and:

  1. The transfer is immediately chargeable to Inheritance Tax; the assets within the trust are ‘relevant property’ and are therefore subject to exit and principal charges.  This was not the case for interest in possession trusts set up before March 2006. 
  2. To understand the Inheritance Tax treatment of interest in possession trusts, we need to be able to differentiate between ‘relevant property’ and ‘qualifying interests in possession’. 
  3. Where trust assets are held on ‘qualifying interest in possession’, such assets are comprised in the estate of a beneficiary.  Therefore, where a beneficiary is a life tenant of a ‘qualifying’ interest in possession trust, the trust assets form part of his death estate.  As ‘qualifying interest in possession trusts’ are already within the scope of Inheritance Tax, property within a qualifying interest in possession trust is not subject to exit and principal charges.

Finance Act 2006 changed the rules such that not all life tenants of interest in possession trusts are now treated as having a ‘qualifying interest in possession’. 

The term ‘qualifying interest in possession’ is used to describe:

IHTA 1984, Section 59 (1);

  1. Assets in a trust for a disabled person;
  2. Assets in an interest in possession trust created on death; and
  3. Assets in a lifetime interest in possession trust created before 22 March 2006. 

IHTA 1984, Section 3A (1):

Assets settled on ‘qualifying interest in possession’ trusts are treated as being part of the estate of the beneficiary with the interest in possession (the life tenant). 

IHTA 1984, Section 49 :

Because such assets are taxed in the beneficiaries’ death estate, ‘qualifying interest in possession trusts’ are not subject to exit and principal charges.

If an individual dies with a qualifying interest in possession in a trust, the trust assets will form part of his death estate.  The executors must declare the value of a qualifying interest in possession on the death estate return   (form IHT400).  If the beneficiary only has an interest in part of the trust fund, the same proportion of the assets in the trust is deemed to form part of his estate. 

Assets held in the deceased’s own right – personal assets etc – make up his ‘free-estate’.  We value the free-estate, deduct any liabilities and then add the value of a qualifying interest in possession to the assets in the free-estate.  This total amount will be charged to Inheritance Tax. 

Taxation

The trustees are responsible for paying income tax at the rates below.

Type of incomeTax rate
Dividend type income7.5%
All other income20%

The trustees are responsible for paying income tax at the rates above.

Sometimes the trustees mandate income to the beneficiary.  This means it goes to them directly instead of being passed through the trustees. If this happens, the beneficiary needs to include this on their self-assessment tax return and pay tax on it. 

Settlor interested trusts

This is where the settlor is also a beneficiary of the trust that they have set up.  In these circumstances the settlor is responsible for income tax on these trusts, even if some of the income is not paid out to them.  However, the income tax is paid by the trustees as they receive the income.

  1. The trustees pay income tax on the trust income by filling out a trust and estate tax return.
  2. They give the settlor a statement of all the income and the rates of tax charged on it.
  3. The settlor tells HMRC about the tax the trustees have paid on their behalf on a self-assessment tax return.  The rate of income tax depends on what type of trust the settlor interested trust is. 

On the death of the settlor the full value of the trust fund forms part of the settlor’s estate.

If you have any questions please call us on 020 7481 2422 or email us at enquiries@wellerslawgroup.com if you would like to know more.

This article was written by Wellers Law Group and the law is correct as at 24th November 2020. Please note that tax legislation changes frequently, so this article should not be relied upon without seeking further legal advice.

Charity Structures for International Religious Organisations

Posted on by Peter Spencer

If you’re an international religious organisation looking to establish a formalised legal charity in the UK, there are several structures you can adopt to carry out your philanthropic activities. You may wish to bring overseas workers to support your endeavours, but it is crucial to establish your charity and obtain your charity number before considering visa applications.

The three primary structures to consider are trusts, charitable companies, and charitable incorporated organisations (CIOs).

Trusts

Trusts are a well-known but often considered an archaic structure. Trusts are unincorporated, meaning that the trustees of the charity have personal liability and can be sued personally. To register with the Charity Commission, a trust needs a minimum income of £5,000, which is standard for most charity structures.

It is good to be aware of trusts, but they are generally not recommended due to the personal liability involved.

 

Charitable Companies

A charitable company is established as both a company and a charity. It is considered established from the point of registration with Companies House, which can take around 72 hours. This means you don’t have to wait for registration with the Charity Commission to begin charitable activities in the UK, which can take up to six months. This is particularly beneficial if you wish to purchase property in the UK quickly. Like trusts, a charitable company requires a minimum income of £5,000 to register with the Charity Commission.

Unlike trusts, charitable companies are incorporated structures, limiting trustee liability, meaning trustees cannot be personally sued. Another significant advantage is that charitable companies are generally recognised internationally, which can facilitate dealings with foreign banks and reduce the need for extensive explanations. This structure can also be advantageous if you need to borrow money, for example, to purchase property, as banks often prefer charitable companies over CIOs, although this preference is changing.

The primary disadvantages of charitable companies are that they are subject to both the Companies Act and the Charities Act, and the trustees are also directors. This dual responsibility requires some education to ensure compliance with both sets of regulations, including dual reporting.

 

Charitable Incorporated Organisation (CIO)

The Charities Commission introduced the CIO structure because many people found the concept of a charitable company too complex. CIOs are incorporated structures that limit trustee liability, meaning that any legal claims are limited to the assets within the CIO.

There is no income threshold for registration with the Charity Commission, so you do not need a pledge letter from your parent charity. However, you must wait for the Charity Commission to grant charitable status and provide a charity number before commencing philanthropic work and bringing overseas workers to the UK.

A key advantage of a CIO is that you only need to file annual reports with the Charity Commission, unlike a charitable company which requires dual reporting. CIOs are more suitable for smaller organisations not looking to purchase property immediately and are comfortable with the wait for Charity Commission registration.

 

It is essential to remember that before bringing overseas religious workers to support your charitable activities, you must have chosen your charity structure and received your charity number from the Charity Commission.

If you want to set up a charity in the UK to facilitate your philanthropic work, get in touch with Peter Spencer today by email at peter.spencer@wellerslawgroup.com.

 

Corporate Insolvency: Care and Caution that should be taken by creditors and debtors

Posted on by Priyanka Kumar

The current financial climate has made getting paid outstanding debts increasingly difficult. Consequently, to put pressure on a debtor, creditors sometimes resort to serving statutory demands, or proceeding with winding-up petitions as a method of debt recovery. A winding up petition is a creditor’s petition to have a company placed into compulsory liquidation by the Court, resulting in the company being wound up.

However, using a statutory demand for a commercial debt should only be embarked upon with care and caution.

In this article we explore the key considerations that should be borne in mind for creditors who are considering serving a statutory demand and debtors who receive one.

 

What exactly is a statutory demand?

A statutory demand is a formal written demand in prescribed form from a creditor to a debtor requesting payment of the debt within 21 days. The prescribed form is governed by section 7.3 of The Insolvency (England and Wales) Rules 2016. Where the debtor is a company, the debt must be for at least £750. (Where the debtor is an individual, it must be for at least £5,000). It is a ‘pre-cursor’ to a winding-up petition (or bankruptcy petition in the case of an individual).

 

Procedure for service

The statutory demand must be served personally upon the debtor’s registered office. It is best to have this personally served (by a process server or otherwise) so there can be no doubt that the demand has been brought to the debtor’s attention.

If the debt remains unpaid and unchallenged for more than 21 day, this demonstrates that a Company is unable to pay its debts, that the debt is undisputed and therefore a winding up petition may be presented. Statutory demands are, therefore, aggressive in nature and should not simply be used as a simple debt recovery tool.

 

What should a creditor consider before serving a statutory demand?

Does the debtor dispute the debt ?

Where there is a ‘genuine dispute on substantial grounds’ about all the sums claimed in the statutory demand or winding-up petition, the court will not hesitate to restrain the creditor from taking any further steps, by setting aside the statutory demand. Unsurprisingly, it is considered an “abuse of process” for a creditor to serve a statutory demand where the debtor genuinely disputes the debt.

The dispute must be genuine. The court will not conduct a ‘mini-trial’ to determine whether the debt is due but if it is satisfied that there is a genuine dispute, it will set aside the statutory demand on the basis the correct forum for the determination of the claim is via a County or High Court claim.

So if the debtor is not paying the debt because it genuinely disputes it, a creditor should consider alternative approaches.

The advantage of using a statutory demand is that it is usually a faster way to recover payment from a debtor than using sending a Letter Before Action in accordance with the pre-action protocol for debt claims and then issuing debt recovery proceedings. However, If the debt is disputed then the Letter Before Action route is the appropriate one.

The debtor has a serious and genuine counter- claim exceeding the debt

 

This article was written by Priyanka Kumar from our litigation team. Get in touch with Priyanka today to find out how she can help you by email priyanka.kumar@wellerslawgroup.com.

Employment Law Changes with the new Labour Government

Posted on by Nina Francis

After 14 years of a Conservative government, Labour have now taken up residence in Downing Street. Alongside the change in residence, the Labour party’s manifesto outlines several changes that employers need to be aware of, it they are enacted, subject to consultation. These key reforms are set to be introduced within 100 days and span from discrimination law and “Day One Rights” to trade unions and industrial action.

 

Day One Employment Rights – Key Changes:

  1. Unfair dismissal, sick pay and parental leave

Currently, an employee must accrue two years of continuous service to a company before they can claim unfair dismissal in an employment tribunal.

Labour’s reform will grant protection of unfair dismissal as well as sick pay and parental leave which will be deemed “Day One Rights”

 

  1. Fair Pay

National minimum wage (NMW) rates are presently based on average earnings.

With Labour’s manifesto, existing age bands (allowing payment of a reduced rate) will be scrapped in favour of a flat rate for all age groups.

“Fair Pay Agreements” will be introduced, under which pay rates are determined by sectoral collective bargaining. It is likely that this will be trialled out in the social care sector before this is rolled out to other sectors due to a lack of support in the business community.

 

  1. Discrimination Law

Currently, equal pay legislation applies to gender pay disparities to cover disabled and BAME employees. Gender Pay Gap Reporting has been mandatory since 2017.

Key changes in this area will include:

  • Implementation of Ethnicity Pay Gap Reporting (for employers with 250+ employees).
  • Implementation of Disability Pay Gap Reporting (for employers with 250+ employees).
  • Gender Pay Gap Reporting action plans are to be published and are to include outsourced workers. This means that pay gap reporting will be a far larger exercise than it has been historically.
  • Sexual harassment will be treated and have similar protections to whistleblowing
  • There will be enhanced protection of sexual harassment for interns
  • A ban on dismissing returning maternity leavers will be introduced, covering six months after the return to work except in specific circumstances.

 

  1. Enforcement

Labour is set to introduce extensions of time limits for tribunal claims from three months to six months. This is due to delays in the current tribunal system.

Labour are proposing to establish a new state body “Fair Work Agency” with the power to inspect workplaces and take legal action where necessary. This will mean documentation and record keeping will become more significant going forward.

 

  1. Ending “one-sided” flexibility

Labour are planning to implement a ban on “fire and rehire”. Further movement is expected in this area as Labour openly criticised the recently released Tory statutory Code of Practice as being “inadequate”.

Additionally, zero hour contracts will be banned and there will be a shift in narrative on empowering employees to request contracts that reflect the hours of work undertaken.

 

  1. Trade Unions and Industrial Action

Labour will be working to simplify trade union recognition and improve trade union worker access to workplaces. Further, self-employed workers are to enjoy the same improvements to trade union rights as workers.

 

  1. Worker Status & Self-Employment

Labour aim to (eventually) abolish:

  • The U.K.’s three tier system for employment status
  • The distinction between employees and workers – this will need further consultation on the logistics of sick pay, family leave and other policies in these models.

Rights for self-employed people will be written in a contract and will enable self-employed workers to take action on late payments, extend health and safety blacklisting protections to the self-employed. Further clarity and consultation is needed in this area.

 

If you have any enquiries relating to these potential changes, please get in touch with Nina Francis by email nina.francis@wellerslawgroup.com or by phone on 020 3831 2664.

Why You Should Take Legal Advice When Making Your Will and LPA

Posted on by Wellers

Why You Should Seek Professional Legal Advice for Your Will

Your will is one of the most significant documents you will ever create. It sets out your wishes for your estate after you are gone. To ensure it is properly written and legally valid, it is crucial to use a professional solicitor. DIY wills are more prone to errors, which can render them invalid, potentially causing significant complications. A solicitor will ensure that your will is executed correctly, giving you peace of mind.
Professional assistance is essential in drafting your will no matter your circumstances but particularly if you own property in the U.K. or abroad, own a business, have dependents outside your immediate family or you’re aiming to reduce your inheritance tax bill or have complex wishes.

Who Should Make a Will?

Everyone over the age of 18 should make a will, particularly if you have a partner, children, property, shared financial assets, or any other significant assets. Making a will gives you control over your legacy. You can choose an executor you trust to carry out your wishes.
Without a will, your assets will be distributed according to the Rules of Intestacy. This means you cannot choose your executor; one will be appointed for you, who may not act in your best interests.

Keeping Your Will Up to Date

It is important to regularly review your will with a solicitor to ensure it reflects your current circumstances. Significant life events, such as marriage, remarriage, having children, a family member’s death, or changes in inheritance tax laws, necessitate updating your will. This ensures it remains effective and honours your intentions.

Understanding Inheritance Tax

Inheritance Tax (IHT) is payable on estates exceeding the Nil Rate Band allowance—the amount you can leave tax-free. While everyone is subject to the Nil Rate Band, in 2017, the Government introduced an additional Nil Rate Band, subject to conditions:

1. You must have a property to leave to your descendants (children or grandchildren).
2. Your estate must be valued at under £2 million.

By consulting with a solicitor, you can ensure that your will is valid, up-to-date, and optimised to manage inheritance tax effectively.

Find out more about why you need a professionally drafted Will, with Dawn Pearce

 

Why You Need to Create a Lasting Power of Attorney with a Legal Professional

Creating a Lasting Power of Attorney with a solicitor ensures that the document is correctly drafted and legally sound. Solicitors provide professional advice tailored to your specific situation, helping you understand the implications of your choices. They also ensure that the document meets all legal requirements, reducing the risk of errors that could render it invalid.

Additionally, a solicitor can help you navigate the complexities of LPAs, including advice on selecting appropriate attorneys and understanding their responsibilities. By creating an LPA with a solicitor, you can have peace of mind that your affairs will be managed according to your wishes, without unnecessary delays or complications.

What is an LPA?

A Lasting Power of Attorney (LPA) is a legally binding document that enables you to appoint someone to act on your behalf when you are no longer able to do so yourself.

There are various reasons you might need someone to act on your behalf. In the short term, this could be due to a hospital stay where you need someone to manage your bills. Over a longer period, it might be necessary if you are diagnosed with a condition like dementia and need someone to take over your property and financial affairs.

Types of Lasting Power of Attorney

There are two types of LPAs:

  1. Property and Financial Affairs: This allows you to appoint someone to manage your finances, property, claim, receive or use your benefits, and handle your bank accounts.
  2. Health and Welfare: This allows you to appoint someone to make decisions on your behalf regarding where you live and your medical care when you can no longer make these decisions yourself.

If you have an Enduring Power of Attorney (EPA) document, you will need to create an LPA to ensure your wishes are upheld. EPAs stopped being issued in 2007 and were replaced by LPAs.

If you lose capacity and only have an EPA, the document must be sent off for registration with the Office of the Public Guardian, which can result in a lengthy delay before any action can be taken, during which your assets are frozen. With an LPA, registration occurs at the time of creation, ensuring it is ready for use whenever needed.

 

Get In Touch With Our Team Today

Ensuring that your Lasting Power of Attorney and Will are properly drafted and legally sound is crucial for safeguarding your future and the future of your loved ones.

Our experienced solicitors are here to provide expert guidance and support, ensuring your legal documents are tailored to your unique needs.

Don’t leave such important matters to chance. Contact the Wellers Law Group team today to discuss how we can assist you in creating a Lasting Power of Attorney and drafting your Will.

 

Find out more about LPAs with Dawn Pearce

Intellectual Property Rights In The Music Industry: Trump vs O’Connor

Posted on by Wellers

Sinead O’Connor’s Estate has asked Donald Trump not to use her famous “Nothing Compares 2 U” recording at his political rallies.

Trump has some form in using well known pop and rock songs at his political rallies which on occasion have riled the artists concerned.

 

So, what is the legal position?

We must distinguish between the position in the US and the UK and also look at what rights are involved.

Putting it simply there are two copyrights involved:

  1. The copyright in the songs themselves; and
  2. The copyright in the sound recordings embodying those songs.

 

Generally, in the US the relevant performing right societies, generally ASCAP and BMI, administer the public performance of songs (compositions).  These compositions are generally owned by music publishers rather than writers since the songwriters have assigned the rights in those composition to music publishers.  As music publishers want to monetise exploitation of those compositions as much as possible, even if they could (which is debatable) stop the performance of those compositions at political rallies, they will generally not do so unless the songwriter concerned has a contractual right to stop it or is a big enough name for them to care about.

In the case of performers who do not write their own songs, there is nothing they can do to stop this in relation to the composition itself.

In fact “Nothing Compares 2 U” was written by Prince rather than Sinead O’Connor so any legal attempt to prevent its being played at Trump’s rallies would need to be by Prince’s estate or music publishers.

The position is similar in the UK where PRS is the only performing right society. Generally, they will be granting blanket licences for the public performance of all songs be they political rallies, football matches or restaurants and bars.

The position in relation to copyright in sound recordings is a different one.   Sound recordings are generally owned by artists’ record companies.  Although there may be a few examples where artists have retained or bought back their sound recordings generally it is the record companies who are in charge here. There is a major difference in the US and the UK. In the US generally the public performance of sound recordings has no copyright protection so that the record companies, even if they wanted to, could not stop their public performance at political rallies.

In the UK there are so called “neighbouring rights” which protect the public performance of sound recordings.  These are administered by Phonographic Performance Limited (PPL) and generally PPL will grant blanket licences. However, PPL’s public position is that they will not grant a licence for public performance of sound recordings at political rallies without the “rights holders’” consent.  This presumably means the record companies. Although, in the UK, the performing artists do receive royalties from the public performance of their recordings so perhaps PPL will take note of their sensibilities. If in fact PPL seek only the record companies’ consent then that will normally be forthcoming unless they have an artist objecting who has enough sway (generally where they are earning the record company millions of pounds and do not owe them millions of pounds!) to bring about the prevention of the public performance of the sound recordings concerned.

 

If you have an Intellectual Property enquiry, get in touch with Howard Ricklow to find out how he can help you:

Email: howard.ricklow@wellerslawgroup.com

Phone: 020 7481 6396

Clinical negligence or just bad service?

Posted on by Penny Langdon

We are all aware of the problems besetting the NHS in recent years, the massively long waiting lists, shortage of GP’s, shortage of nurses and hospital Doctors and shortage of resources such as MRI machines. We have heard about hospitals failing to meet A&E turnaround targets and elderly patients causing “bed blocking”.  We all know someone who says they cannot get a GP appointment or a referral to a specialist or a scan or who is waiting years for an essential elective surgery.

Many of us have suffered or know someone who is struggling with symptoms for which they cannot get a diagnosis. The NHS was creaking before COVID but never seemed to recover from that and now is beset by industrial action by junior doctors and consultants and nurses.

If you or your family have been in any of the above situations, you can be sure that that this all represents a terrible level of service and if you are a tax payer you surely would be entitled to think that you are not getting value for your money when having paid national insurance all your life, you now have to fork out thousands to have your knee replacement done privately or sit on the  NHS waiting list when in the meantime your overall heath suffers a major set back as a result.

But – does all this amount to clinical negligence?

Certainly, some would say it is negligent in the wider sense but to meet the legal definition of clinical negligence is much harder than you might think.

There are 3 criteria you, as a claimant, must prove if you are considering making a claim for clinical negligence.

First, you must prove there has been a breach of the duty of care. The legal test for this is in summary that, if a doctor reached the standard of a responsible body of medical opinion, he was not negligent. So a doctor is allowed to make a judgement, which turns out to be wrong, if a reasonable number of other similarly qualified doctors would have made the same judgement in the circumstances, even if they are in the minority. Therefore, if, based on your symptoms, your GP thinks you have a certain condition, but it subsequently turned out you had a different condition, but he was actually going through the same process of elimination which other doctors would have followed, then he will not be negligent even though he was wrong, and this caused a delay in effective treatment.

Secondly, you must prove is that there has been some damage arising from what you think is the negligent act or omission. If, for example, a hospital doctor, in breach of the duty of care failed to diagnose a undisplaced fracture in a bone of a patient who is in a coma after a car crash. By the time the patients eventually emerged from the coma the fracture had healed by itself with no treatment and no ill effects. So, although there has been a breach of the duty of care there is no, or at least, minimal damage.

Finally, the Claimant must prove that the breach has caused the damage. This is often not as straightforward as it sounds. This might happen for example if there was a negligent delay in treatment of a leg fracture in an accident, following which the condition of the leg deteriorated and had to be amputated. Subsequently the evidence showed that the leg was so badly damaged it would have needed to be amputated in any event notwithstanding the delay. So there is a breach of duty and damage (the amputation) but the breach has not caused the damage.

There is still a backlog for treatment across a huge range of services in the NHS which is to a large degree a still indirectly a result of the pandemic and it does seem inevitable that unrelenting pressure on systems and individuals is going to result in negligence occurring.  Whether or not the NHS is going to be able to rely on the pandemic as a defence in many cases is still uncertain. It is very unlikely that the Courts will say that in every case where that has been a delay caused by Covid, either directly or indirectly, that this is negligence because this would open the flood gates to litigation which would overwhelm public finances. On the other hand, each case will still have to be assessed on its own merits and success will be dependant upon the specific facts on the case.

If you think that you or a family member or friend have suffered bad service from the NHS which has resulted in serious injury and or financial losses, we would be happy to discuss this with you.

 

If you have suffered clinical negligence, get in touch with Penny Langdon today by email penny.langdon@wellerslawgroup.com or by phone on 020 8290 7958.

 

Untying the knot: Two years on from the introduction of No Fault Divorce

Posted on by Manveen Padda

A Solicitor’s Perspective on No Fault Divorce

After years of campaigning, the “No fault divorce” finally came into effect on 6th April 2022. Was it worth it? How is it going?

The answer to the first part is a resounding, yes, it was worth it. Our research suggests the new law it is working. In the past, a divorce at its best could be as quick as 6 months or in majority cases it would drag on for several years before the final order, commonly known as “the Decree Absolute” would be granted. A complex divorce where the other party would fail to respond or the divorce was being defended, was distressing, lengthy and expensive. To understand the difficulties, it would help to outline a brief history of the Divorce law over time.

Brief history of an English Divorce

Divorce originates from 1533 (Henry VIII) when only a Pope could grant a divorce. Legal divorce was introduced in 1670 which allowed only men to apply for a divorce. In 1857 women were allowed to apply but only in exceptional circumstances, one of them being rape which had to be proved in a court of law. Over time more reasons were added but the core principle remained the same, that one party had to blame the other. The Divorce Reform Act 1969 was the first ever mention of “No fault divorce”. The Divorce Reform Act allowed the parties to apply on the basis that the marriage has broken down irretrievably using one of the five facts. Three facts were based on blame (unreasonable behaviour, Adultery or Desertion) and two facts were based on no blame (consent with 2 years of separation or 5 years separation). However, the most used reason was “unreasonable behaviour” which meant a party had to blame the other.

No fault Divorce

Campaigns continued to remove the 5 facts altogether and in 1990’s it finally seemed an achievable task. the Family Law Act 1996 included a section that would completely remove fault but unfortunately at the last minute the relevant sections of the Act were left out for being unworkable for two warring parties. Then came the famous case of Owen & Owen in 2018, where the wife tried to divorce her husband using the fact of unreasonable behaviour but the courts rejected her reasons on the basis that the behaviour was not unreasonable enough to warrant a divorce. She had to wait five years, from the date of separation, before she could finally get divorced in 2020. This supported the campaigns for the “No fault Divorce” which finally came into effect on 6th April 2022.

Progress since 2022

Working as a family law solicitor, I have seen the changing trends in our practice in divorce. Most parties are now applying for the divorce themselves, using the court’s online system. This is simple to follow and easy to achieve as no fault is being apportioned to the breakdown of the marriage. The change in law is working as it removes the necessity of either party making an accusation against the other, thus allowing for an amicable, quick and cheaper divorce. If the marriage has ended, neither party has to defend the divorce and the timeline is set to achieve a final order (Decree Absolute) in as quickly as 6 months.

How can we help  

Whilst the divorce law has changed to simplify the process, unfortunately the remainder of the family law issues remain as complex as ever. Issues arise when the parties are dealing with matters which are ancillary to the divorce. Often there are disputes concerning children arrangements and/or protecting property, savings, income, pensions and generally separating financial commitments. This is where we can help. If you would like to discuss any aspect of separation and divorce including pre/post nuptial agreement, cohabitation agreements please contact our team of specialist lawyers trained to assist you.

 

 

This article and testimony was written by Manveen Padda, a Family Law Solicitor at Wellers Law Group. Manveen, alongside the rest of the Family Law team, are here to help, no matter your family circumstances. Get in touch with Manveen today by email to discuss your options for divorce.

Skilled Worker salary increases: FAQ

Posted on by Oliver O'Sullivan

 

  1. What is the new minimum salary level for sponsoring workers as Skilled Workers?

It depends on the job role. The minimum salary for a standard Skilled Worker application is rising from £26,200 to £38,700 per annum as a gross base salary. However, each job role also has its own minimum salary level that also needs to be met. For example, the ‘Business Development Manager’ role that is currently under SOC code 3545 currently has a minimum salary of £35,100. This will increase by 50% to £52,500 from 4 April under SOC code 3556.

 

  1. When will this increase commence?

The increase will apply to any new Certificates of Sponsorship (CoS) assigned after 4 April 2024. Once a CoS has been assigned (i.e. paid for), it has to be “used” in an application within 3 months. The start date for the job cannot be more than 3 months from the date of application. The current salary level could be used for anyone starting a new position up to the end of September 2024 if managed correctly by assigning a CoS before 4 April 2024.

The Sponsor Management System will be out off service on 3 April 2024, so all CoS will need to be assigned by 7pm on 2 April 2024.

 

  1. Can the salary include any allowances?

The minimum salary level only includes basic gross pay before income tax and including employee pension and national insurance contributions.

 

  1. Can the salary be pro-rated?

 

The minimum salary is based upon a 37.5-hour week. Where the weekly hours are higher than 37.5, the salary will be pro-rated. For example, a salary of £38,700 based on a 37.5-hour week would need to be £40,248 if based on a 39-hour week.

Part-time positions would need to earn the minimum salary based on a 37.5-hour week. A 22.5-hour week, for example, would need to earn at least the SOC code minimum or the minimum salary of £38,700, whichever is higher.

 

  1. Does this salary change apply to anyone who is already on a Skilled Worker visa?

 

The salary change applies to anyone being sponsored using a CoS assigned after 4 April 2024. No changes need to be made to the salaries of anyone currently being sponsored on a CoS issued before this date.

An extension application will require a new CoS, however. If an extension application is happening after 4 April 2024, then the higher minimum salary levels will then apply. If this presents an issue in terms of being able to increase the salary level at that point, it might be worth considering making the extension application before 4 April 2024, even if the employee currently has a visa with an expiry date after then.

 

Get in touch with Oliver O’Sullivan for any enquiries relating to skilled worker salary increases.

 

 

 

 

 

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