Category: Articles

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.

 

 

 

 

 

International Data Transfers – 21st March 2024 deadline approaches!

Posted on by Wellers

International transfers of personal data to a recipient outside of the UK may only take place if:

  1. the jurisdiction is deemed to have an adequate level of protection for data subjects’ personal data compared with that of the GDPR; or
  2. there are “appropriate safeguards” in place; or
  3. there are only occasional necessary transfers and a particular derogation my apply.

The countries deemed by the UK to have adequate data protection laws are few, including the European Economic Area (EEA) countries, Andorra, Argentina , Faroe Islands, Guernsey, the Isle of Man, Israel, Jersey, New Zealand, Switzerland and Uruguay.

If personal data is to be exported from the UK to any other country then generally the most common “appropriate safeguard” utilised is the approved Standard Contractual Clauses (“SCCs”). Pre-Brexit the EU approved SCCs applied to the UK as they did to every EU country. However, new forms of SCCs approved by the EU were adopted on 4th June 2021 (“New SCCs”).

The UK’s answer to the New SCCs was and is the International Data Transfer Agreement (“IDTA”) which came into force on 21st March 2022.

As well as the IDTA, the UK adopted an addendum (“UK Addendum”) to the New SCCs which is convenient for businesses with data transfers subject to both EU and UK GDPR and/ or who may already have the New SCC’s in place.

Whilst many organisations have utilised the IDTA or the UK Addendum, some organisations have not and have legitimately continued to use the original SCCs. That option ends on 21st March 2024.

Accordingly, it will be a breach of UK GDPR/ Data Protection Act 2018 for organisations internationally transferring personal data relying on “appropriate safeguards” and utilising SCCs unless they do so utilising IDTA or the New SCCs and the UK Addendum.

You should contact us immediately if you need advice in this area to avoid the risk of incurring substantial fines.

Contact Howard Ricklow via email at howard.ricklow@wellerslawgroup.com or by phone on 020 7481 6396.

The Economic Crime and Corporate Transparency Act 2023

Posted on by Wellers

These changes which are in effect from 4th March 2024 have been enacted to enhance the role of the Registrar of Companies and Companies House as a proactive regulator building on the changes introduced under the Economic Crime (Transparency and Enforcement) Act 2022.

 

The principal changes include:

  • Registered office – all companies must now have an “appropriate address” at all times. This means that companies will no longer be able to use a PO box as their registered address and the address must be one where an acknowledgement of receipt of delivery can be obtained

 

  • Email address – companies will need to provide a registered email address which will need to be monitored. This will be used for communications with Companies House and will not be publicly available

 

  • Lawful purpose – upon incorporation the subscribers of the company will need to confirm that they are forming for a lawful purpose and subsequently when filing the company’s annual confirmation statement there will need to be a statement that the company’s future activities are lawful

 

  • Company names – there are expanded restrictions on company names, including potential restrictions on names which could be used to facilitate dishonesty or deception

 

  • Annotations – Companies House will be able to annotate the Register where information appears misleading or incorrect

 

  • Companies House –may use data matching software to identify and remove inaccurate information from the Register

 

  • Powers of the Registrar – Companies House will have additional powers to scrutinise and reject company information which appears incorrect or inconsistent with existing filings

 

  • Data – the Registrar will have the power to share data with other governmental departments and law enforcement agencies.

 

UK companies will need to become aware of these important changes and ensure that they comply with the provisions since in some cases failure to do so could lead to criminal liability for the company and its officers.

Get in touch with Wellers Law Group to assist you with any changes which need to be made in terms of proper compliance.

 

This article was written by Howard Ricklow, our head of Company and Commercial law. To connect with Howard and to enquire about his services, please email howard.ricklow@wellerslawgroup.com or call him on  020 7481 6396.

 

Navigating Inheritance Tax Implications for Cohabitating Couples

Posted on by Wellers

In a rapidly evolving social landscape, cohabitation has become a prevalent lifestyle choice for many couples. However, when it comes to inheritance tax, cohabitating couples often find themselves in a challenging situation when it comes to writing their wills and making them tax efficient.

Inheritance tax laws are typically structured to provide certain benefits and exemptions for legally married or civilly partnered couples. Unfortunately, cohabitating couples may not automatically enjoy the same rights and protections. As a result, the passing of assets from one partner to another in the event of death can trigger tax liabilities that may not be evident in traditional marital arrangements.

In many jurisdictions, married couples benefit from generous estate tax exemptions and the ability to transfer assets to a surviving spouse without incurring inheritance tax. Cohabitating couples, however, may face a different reality. Upon the death of one partner, the surviving partner could be subject to inheritance tax on assets that exceed the prevailing tax-free threshold (currently £325,000).

While cohabitating couples may face additional challenges, they are not without recourse. Strategic estate planning can play a pivotal role in mitigating tax liability and ensuring that a partner’s legacy is preserved.

Crafting a comprehensive and legally sound will is of paramount importance for cohabitating couples. A well-drafted will can outline the distribution of assets and provide clarity on the intentions of the deceased partner. Additionally, cohabitants should explore the inclusion of specific provisions to minimize tax exposure and enable the surviving partner to inherit without undue financial burden.

Cohabitating couples may consider strategic lifetime gifting as a means of transferring assets while minimising tax implications. By gifting assets during their lifetime, partners can potentially reduce the taxable value of their estate, thereby decreasing the inheritance tax liability for the surviving partner.

Understanding the nuances of inheritance tax is crucial for preserving financial legacies and safeguarding the interests of both partners. Cohabitating couples can take proactive steps, such as strategic estate planning, crafting comprehensive wills, and seeking professional advice in relation to cohabitation agreements, to navigate the challenges posed by inheritance tax. By doing so, they can ensure that their intentions are realised, their financial well-being is protected, and their loved ones inherit their assets as they intended in most tax-efficient way possible.

This article was prepared by Naomi Augustine-Walker, a private client solicitor in our London office. You can contact Naomi by email: Naomi.Augustine-Walker@wellerslawgroup.com or by telephone: 020 3831 2669 For our Bromley office please call 020 8464 4242 and for Surrey the number is 01372 750100.

The Difference Between Chargeable Lifetime Transfers (CLT) and Potentially Exempt Transfers (PETs)

Posted on by Wellers

When planning to reduce your inheritance tax bill, understanding the difference between potentially exempt transfers (PETs) and chargeable lifetime transfers (CLTs) is essential. Making the right choice could save your family thousands in tax.

The easiest way to reduce your estate is to spend it! This can be done either by enjoying the money yourself during your lifetime or gifting it to friends, relatives or charities. But not all gifts are treated equally for tax purposes.

What is a potentially exempt transfer?

A potentially exempt transfer (PET) is a gift you make during your lifetime that could become completely free from inheritance tax. The key word is “potentially” – these gifts start as potentially taxable but become exempt if you survive for seven years after making them.

Potentially exempt transfer examples include:

  • Gifts of money to children or grandchildren
  • Transferring property to family members
  • Giving away valuable possessions or investments
  • Setting money aside for a loved one’s future

These gifts aren’t immediately taxable, which makes them an attractive option for inheritance tax planning.

What are chargeable lifetime transfers?

Chargeable lifetime transfers are immediately chargeable to inheritance tax. Such transfers commonly involve payments into a trust which will incur a 20% tax charge on anything over the gift-giver’s nil-rate band (currently £325,000).

Chargeable lifetime transfers examples include:

  • Gifts into discretionary trusts
  • Transfers to certain types of trust for disabled beneficiaries
  • Gifts to companies
  • Some transfers involving overseas trusts

Chargeable lifetime transfer vs PET – key differences

The main differences between PETs and CLTs are:

Immediate tax:

  • PETs: No immediate tax to pay
  • CLTs: 20% tax on amounts over £325,000

After seven years:

  • PETs: Become completely tax-free
  • CLTs: Original 20% charge stands, but no additional tax

If you die within seven years:

  • PETs: May become chargeable at up to 40%
  • CLTs: May face additional tax up to 40% (less the 20% already paid)

Potentially exempt transfer 7 year rule

The potentially exempt transfer rules centre on a crucial seven-year period. If you survive for seven years after making a PET, the gift becomes completely exempt from inheritance tax and no longer counts against your nil-rate band.

How the 7 year rule works:

  • Years 0-3: Full 40% tax if you die (on amounts over £325,000)
  • Year 3-4: 32% tax (20% taper relief)
  • Year 4-5: 24% tax (40% taper relief)
  • Year 5-6: 16% tax (60% taper relief)
  • Year 6-7: 8% tax (80% taper relief)
  • After 7 years: No tax at all

Potentially exempt transfer taper relief

Potentially exempt transfer taper relief reduces the inheritance tax rate on PETs if you die between three and seven years after making the gift. This relief only applies to the tax on the gift itself, not to the overall estate.

Important points about taper relief:

  • Only applies after three years
  • Reduces the tax rate, not the value of the gift
  • Only benefits gifts that exceed the nil-rate band
  • The gift still uses up nil-rate band for seven years

Who pays tax on potentially exempt transfers?

If inheritance tax becomes due on a potentially exempt transfer, the recipient of the gift is primarily responsible for paying the tax. However, if they cannot pay, the estate becomes liable. This is why it’s important to:

  • Keep records of all substantial gifts
  • Consider whether recipients could afford potential tax
  • Think about life insurance to cover potential tax liabilities

Do I have to declare a potentially exempt transfer?

You don’t need to declare potentially exempt transfers to HMRC when you make them. However, you should:

  • Keep accurate records of all gifts
  • Note the date and value of each transfer
  • Record who received the gift
  • Save documentation for seven years

Your executors will need this information if you die within seven years of making the gift.

Inheritance tax and potentially exempt transfers – exemptions and allowances

Gifts to charities and spouses are exempt from inheritance tax. You can gift as much as you like during your lifetime to these recipients and there will be no inheritance tax payable.

Annual exemptions that don’t count as PETs

Beyond these special exemptions, everyone has annual allowances that are immediately free from inheritance tax – they don’t even count as PETs:

£3,000 annual exemption:  You can give away £3,000 each tax year without any inheritance tax implications. If you don’t use it all, you can carry forward the unused amount for one year only.

£250 small gifts You can give as many £250 gifts as you like to different people each year. However, you can’t combine this with your annual exemption – so you couldn’t give someone £3,250 using both allowances.

Wedding and civil partnership gifts

  • To your children: £5,000
  • To your grandchildren: £2,500
  • To anyone else: £1,000

Why these exemptions matter:  These gifts are immediately exempt – they don’t use up your nil-rate band and won’t be subject to inheritance tax even if you die within seven years. Couples can each use their own allowances, effectively doubling these amounts when giving jointly.

Potentially exempt transfer limit

There’s no upper limit on potentially exempt transfers, but practical considerations apply:

  • Gifts over £325,000 risk inheritance tax if you die within seven years
  • You must retain enough to maintain your standard of living
  • Very large gifts might be challenged if you continue to benefit

Unused annual allowances: You can carry forward one year’s unused annual exemption. For example, if you didn’t make any gifts last year, you could give £6,000 this year. Couples could potentially give £12,000 if both have unused allowances.

Regular gifts from surplus income

Regular gifts from surplus income are completely exempt from inheritance tax – they don’t even count as PETs. To qualify:

  • Gifts must be from income, not capital
  • They must be regular (monthly, annually, etc.)
  • You must maintain your normal standard of living
  • Keep records proving the gifts are from surplus income

This exemption has no monetary limit, making it valuable for those with significant surplus income.

Chargeable lifetime transfer after 7 years

Unlike PETs, chargeable lifetime transfers don’t become exempt after seven years. The initial 20% tax always stands. However, if you survive seven years:

  • No additional inheritance tax is due on death
  • The CLT no longer affects your nil-rate band
  • The trust continues under its original terms

This certainty can make CLTs attractive despite the upfront tax cost.

Potentially exempt transfers and chargeable lifetime transfers – making the choice

Choosing between PETs and CLTs depends on your circumstances:

Consider PETs when:

  • You’re confident of surviving seven years
  • You want to make outright gifts
  • You prefer to avoid immediate tax
  • The recipients are responsible adults

Consider CLTs when:

  • You need to retain some control via trustees
  • Beneficiaries need protection
  • You’re planning for multiple generations
  • The immediate 20% tax is acceptable

Get expert advice on lifetime transfers

Understanding potentially exempt transfers and chargeable lifetime transfers is complex but getting it right could save significant inheritance tax. Our experienced private client team can help you choose the most appropriate strategy for your circumstances.

We can advise on:

  • Whether PETs or CLTs suit your situation
  • Maximising available exemptions and reliefs
  • Record-keeping requirements
  • Life insurance to cover potential tax
  • Trust arrangements for CLTs

To learn more about how PETs and CLTs affect you, get in touch with Annelise Tyler by email annelise.tyler@wellerslawgroup.com or by phone 01732 446374 today.

SDLT on Mixed Use Property

Posted on by Wellers

With Stamp Duty Land Tax (SDLT) charged differently on residential and non-residential property, the disposal of a mixed-use property can lead to tax consequences that may affect the value you receive on sale.

Recently, the Chartered Institute of Taxation and the Stamp Taxes Practitioners Group agreed new guidance with HM Revenue and Customs (HMRC) on the classification of property in some common cases where there is mixed use of the premises.

HMRC have decided that the prior guidance that if the property is marketed as residential, it will be a residential property for SDLT purposes should not apply. Instead the test will be if the property is used or suitable for use as a residential property at the date of sale.

If a building is demolished or derelict, it will not be regarded as being ‘in use or suitable for use as a dwelling’, and where such a building is being reconstructed, the position will be decided on the facts: the work has to be significant – there is no ‘golden brick’ rule.

Lastly, where there is a mixed residential/non-residential use, the SDLT status of the property will depend on the facts – a ‘home office’ will be residential, but a self-contained business office (e.g. a surgery) or area let separately is likely to be classified as commercial. The test here is whether an identifiable use of an area precludes use of that area for any other purpose.

Always take professional advice before putting a property on the market.

 

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