Archive for month: March, 2015

The thing with a Lasting Power of Attorney (LPA) is that often when you need it, it’s already too late to register it.

You’ll see some sites (including the government’s Gov.uk information portal) refer separately to ‘making’ and ‘registering’ an LPA, but basically unless it’s registered, it’s worthless.

The important point is, you need to register your LPA when you are still legally capable of making such a decision in your own right – even though an LPA can be designed to give somebody else such decision-making powers.

As such, you might want to consider registering an LPA if:

• You have a diagnosed degenerative cognitive condition or a history of such in your family.
• You have strong opinions about how you would want to live following a brain injury or stroke.
• You are approaching old age and want to name an individual to look after your finances.

In short, an LPA gives control of your money, your assets or your decisions to a named representative, who can then act on your behalf (and usually in your best interests).

As soon as it’s been written and registered, it can be invoked, or you can set certain circumstances in which it will come into effect.

You can also revoke an LPA later if you are still mentally capable, so until it is brought into effect, it shouldn’t feel like you’ve handed over your decision-making powers for life.

Ultimately an LPA means somebody you trust will be able to handle your money, property, and decisions about your health, medical treatment, welfare and so on, if you are not mentally capable to do so yourself.

So if you have a large estate and don’t want any doubt over who can sell it off on your behalf; your children don’t get on with each other and you don’t want them sharing the responsibility; or you simply want to decide who’s in charge of what happens to you in your twilight years; an LPA is the legally binding document that can make sure your views are expressed in writing, and respected under the laws of the land.

By R A Wilkinsons

A man has been left ‘distressed and humiliated’ by the discovery that his five-year-old son, born through IVF treatment, was not actually his – and has subsequently been awarded £40,000 in compensation from his former wife.

The couple, referred to only as X and Y in the High Court, married in 2002, and in 2004 travelled to Spain to undergo IVF treatment, at which time he provided a sperm sample to the hospital there.

Before doing so, the couple had drawn up an agreement that he would not have the ‘normal’ financial responsibility for any child conceived, which had caused considerable upset between them.

Within a few months, the woman returned to the same clinic, this time with an ex-boyfriend, who also provided a sperm sample.

In late 2005 a son was born, and six months later X and Y separated, with X subsequently sharing parental responsibilities and paying a total of around £80,000 in maintenance charges.

But in 2011, Y revealed that X was not the child’s father – he had been conceived using her ex-boyfriend’s sperm, a claim that was verified using a DNA test.

She said: “The only reason I took [my ex to Spain] was because my ex-husband gave me that document to sign.”

Her defence in court hinged on the claim that her former spouse had never ‘necessarily’ been certain that he was the boy’s father.

But the High Court awarded £40,000 back to X who, due to a separate court case, is now banned from seeing the child until the age of 18.

He told BBC Radio 4′s PM programme: “I don’t regret any of the time I spent with my child at all. I don’t regret that ever, but when someone actually comes along years later and spoils everything that way, you’re revisiting all those experiences thinking, that wasn’t right was it, and not for him either.”

By Pricketts Solicitors 

Property investors who purchase dwellings via a company, a ‘collective investment vehicle’ or through a partnership with a corporate entity should be aware of the changing rules on ATED.

The threshold for the Annual Tax for Enveloped Dwellings category has been falling in recent years – from £2 million to £1 million and, from 2016, is likely to drop further to just £500,000.

If you own a dwelling via a commercial entity, it falls within this valuation range, and it is not being used for charitable purposes, you could face a tax charge on it.

The valuation must have been over £2 million on April 1st 2012; or £1 million from April 1st 2015; or if the property was acquired after these dates, the respective threshold still applies until the scheduled drop to £500,000 in 2016.

For the period from April 1st 2014 to March 31st 2015, the chargeable amounts range from £15,400 for properties over £2 million, to £143,750 for those valued at more than £20 million.

And they’re growing – at 50% more than the headline rate of inflation for properties over £2 million – with the introduction of a £7,000 band for £1 million properties, and a planned £3,500 charge on £500,000 dwellings from 2016.

It’s important to be aware of this charge, the falling minimum chargeable threshold and the growth in the charges above the rate of inflation.

To minimise your exposure, you can take advantage of certain exemptions – for example charitable status – as well as tax relief, although it’s also worth remembering that the changing ATED rules are an attempt to tackle tax avoidance in the first place.

Unless you are totally exempt from the tax due to charitable status, you should file a return in order to claim reliefs to reduce or eliminate your bill completely.

Like stamp duty, ATED is calculated using a banding system; so if you are close to the next cut-off point, it may be worth avoiding any renovation work that could add to the value of your dwelling, and incur tens of thousands of pounds of additional tax exposure as a result.

By Marsh Brown & Co

The Chancellor has announced that Deeds of Variation are going to be reviewed, following the publicity surrounding the decision of the Milliband family to enter into a Deed of Variation in the past.  Whilst this was an opportunity to poke fun at the Leader of the Opposition, Deeds of Variation are widely used planning tools for a wide range of circumstances.

A Deed of Variation is an agreement to change who inherits all or part of an estate.  They can also apply in the huge number of cases where someone has died without making a Will, or where there has been a mistake in a Will (perhaps it had not been updated for a marriage, birth or death, or where an adopted child had not been included).  When somebody dies without a will, for example, a deed of variation may ensure a widow or widower can stay in their home.

Whilst some may perceive that Deeds of Variation are a way of avoiding tax, they are hugely valuable in helping families deal with estates.  In more cases than not, the driving factor behind a Deed of Variation is to safeguard the interests of the family members, not to reduce inheritance tax.  But if it is to reduce inheritance tax, then they can still only do whatever the deceased would have been able to do in their lifetime anyway, so arguably where is the loss?

What is a Deed of Variation?

A Deed of Variation is a way of legally changing the distribution of an estate, whether that would have passed under the terms of a Will or intestacy.  Where this is made within 2 years of the date of death, it is treated as if it were always in place for inheritance tax purposes.  It is because a Deed of Variation can change the inheritance tax position that it can be viewed as tax avoidance.  In practice, some families may actually pay more inheritance tax in order to secure the estate distribution agreed, or the Deed of Variation may be tax neutral.

For the time being, these remain available and those wishing to amend an estate distribution would be well advised to consider entering into a Deed of Variation.

For more information or if you would like to talk to one of our advisors please call – 0116 266 5394.

By Leanne Hathaway –  EHL Tax

Annual Tax Return

In a headline change announced yesterday, plans are afoot to remove the need for many UK taxpayers to have to submit full Tax Returns. However, this may not be quite as generous as it seems…

Instead the Tax Return is to be replaced with a digital tax account. The Chancellor called the new system a “revolutionary simplification” of the tax return system.

HMRC will automatically collate the tax affairs of millions of UK taxpayers from employers, banks and investment firms into a single digital tax account, which can be checked at any time online. However, taxpayers will still need to check their tax affairs, and for those who are receiving income outside these bands, tax returns will remain in place. Landlords will therefore continue to file tax returns.

The Chancellor said about the new system: “Businesses will feel like they are paying a simple, single business tax – and again, for most, the information needed will be automatically received.”

Further details will be announced later in the year as to how the additional reporting will be implemented.

Business Rates

The Chancellor promised a review of the business rates system. The current system has “not kept pace with the needs of a modern economy” and needs “far-reaching reform” according to the Chancellor.

Business rates are calculated according to the rental value of the property. The problem is that the “rental value” is based on the rental value in 2008, before the economic crash. With Business Rates being up to 49% of this figure, it is making the local high street a very expensive location, driving businesses out of town. It is no coincidence that Charity Shops (which don’t pay Business Rates) are taking up so many of these units.

Changes to the system are likely to help high street shops that are struggling to compete against their online rivals.
The review is expected to examine whether the smallest businesses should be removed from the system altogether, or whether the rates should be revised.

It is already possible to appeal against Business Rates if the valuations applied are incorrect.

Corporation Tax

• The main rate of corporation tax reduces to 20% on 1st April 2015. This is down from 28% at the start of the Coalition Government.
• Class 2 national insurance contributions will be abolished from the next parliament, but with changes to Class 4 likely to capture the reduction, don’t spend your money just yet!
• “Google Tax” – the so called “Google Tax” was further outlined yesterday. Companies that move their profits overseas to avoid tax will be subject to a “diverted profits tax” from April 2015. The tax aims to discourage large companies, such as Google, Starbucks, Apple and Amazon, from diverting profits out of the UK to avoid tax.

If you would like to discuss how these measures might affect your business then please contact us on 0116 266 5394 or click here to send an email.