Spring Cleaning

UK tax legislation changes constantly. A new tax year is always a good opportunity to ensure you are abreast of these changes, to review your personal affairs and to make adjustments if necessary.

Additional inheritance tax free allowance

From 6 April 2017, an additional tax free allowance (known as the ‘residence nil rate band’ (RNRB)) applies so that less inheritance tax may be paid when the family home is left to direct descendants (for example, children and grandchildren). The RNRB has increased to £125,000 for the 2018-2019 tax year. Claiming the RNRB could enable an additional £100,000 to £350,000-worth of assets to pass to the next generation without a charge to inheritance tax.

The terms of your Will can affect your ability to claim the RNRB. Therefore it is important to review your Will (or make one if you have not already done so) and ensure that your family can benefit from the maximum available tax free allowance. 

Non-residents’ capital gains tax

Since 6 April 2015, disposals of UK residential property by non-UK residents have been subject to non-resident capital gains tax. A return must be filed within 30 days of disposal of the relevant property even if no tax is payable.  HMRC is levying fines on non-residents who fail to make such returns, even if they were not aware of the change in legislation.

Making a Will

No matter the size or extent of your estate or the type of property you own it is important to have a properly drafted Will. By making a Will you can choose exactly what will happen to your property and possessions when you die. You can ensure that your spouse, partner and dependents are provided for and review steps to potentially save tax.  If you die without leaving a valid Will, you are said to have died “intestate” and everything you own (with the exception of assets owned as joint tenants) will be distributed under the intestacy rules which can lead to unintended consequences.

Safeguarding important documents

Keeping your original Will in a safe place is of vital importance. When your executor makes an application for Probate they must submit the original Will. If the original Will is misplaced, it can be time consuming and costly to validate a copy of the Will. There is a risk  that you will be treated as intestate which could result in paying more tax than necessary and all or part of your estate passing to the wrong people.

Appointing guardians for minor children

Guardians for your dependant, minor (under 18) children can only be appointed through a valid Will. Without this, children could be placed in protective care whilst guardianship is argued through the courts.

Lasting Powers of Attorney

Lasting Powers of Attorney allow people who you trust to make decisions regarding your health and care and/or finances if you were to lose mental capacity through illness or accident. In the event of losing mental capacity, it can be time-consuming and problematic to continue to run financial matters without appointing an attorney to act on your behalf.  It is often preferable to put Lasting Powers of Attorney in place at the same time as a Will, ensuring that these separate, but equally important, matters are in order whilst they have your attention.

Robert Firth and Charlotte Baden-Powell from our Private Client department would be happy to assist if you have any questions regarding the above. Please click their profiles below for contact details.