Private Client Matters - Amazon S3...Miller Hendry offer tax advice and assistance in relation to Personal Tax advice, Capital Gains Tax planning, Inheritance Tax planning and taxation

Private Client Matters

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Miller Hendry sponsor and support numerous local events and good causes, including the

Dundee & Angus Chamber of Commerce AGM

and the Tug O’ War at the Crieff Highland

Gathering!

M I L L E R H E N D R Y S O L I C I T O R S . C O . U K D U N D E E | P E R T H | C R I E F F

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According to the most up to date figures provided by HM Revenue & Customs (HMRC), the amount of money paid in Inheritance Tax (IHT) by UK families has risen by almost 70% over the last 5 years (2012-2017).

The figures show that in 2011/12, HMRC collected £2.9bn and this increased to £4.8bn for the 2016/17 tax year. The statistics also show a sharp peak in IHT receipts at the beginning of this tax year, with an increase compared to the same period last year of 34%.

Record numbers of estates, particularly in the south of England, are paying IHT as a result of increasing house prices and the freezing of the IHT nil-rate band at £325,000 since 2009.

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Many estates will also have narrowly missed out a new, additional tax-free allowance for those owning a home which became available from April 2017. This is called the “residential nil-rate band” and will eventually be worth an additional £175,000 per person. Added to the £325,000 allowance that everyone gets, this means a new allowance for people who own their own property of £500,000 by 2020/21. In the case of spouses or civil partners, two allowances are commonly available giving a total allowance of £1,000,000.

This additional allowance will be introduced gradually over four years, with the allowance worth £100,000 in 2017-18, £125,000 in 2018-19, £150,000 in 2019-20 and £175,000 in 2020-21.

Separate projections produced by the Office for Budget Responsibility (OBR) also show that the number of estates on which IHT has been paid has more than quadrupled since 2010, from around 10,000 to well over 40,000.

Caroline Fraser, a Partner with Miller Hendry commented: “What we have seen over the last five years is more and more estates being pulled into paying IHT due to increasing house prices, a recovery in the financial markets and the IHT nil-rate band remaining static at £325,000.”

She added: “As a result of the new residential nil-rate band, we should see less estates paying IHT. However, as with any changes in taxation legislation, there are various requirements which must be met for an individual’s estate to qualify for the allowance. Our clients are able to see the potential benefits of this new allowance but, as with all estate planning matters, it is always best to seek professional advice.”

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Income Tax UK rates:The Higher Rate Threshold is increased from £32,000 to £33,500

Tax will be charged on earned income: • Basic Rate - 20% on taxable income up to £33,500• Higher Rate - 40% on taxable income between £33,501 and £150,000• Additional Rate - 45% on taxable income in excess of £150,000

From 2017/18 onwards, all individuals are entitled to the same personal allowance of £11,500 regardless of their date of birth.

Capital Gains Tax Rates:• 10% and 20% tax rates for individuals (not including residential property and carried interests); and• 18% and 28% tax rates for individuals for residential property and carried interests

Inheritance Tax Rates:• Nil Rate Band - £325,000 (frozen until 2020/21)• Anything above the threshold taxed at 40%(36% for those who leave 10% or more of their net estates to charity)• Residential Nil Rate Band - £100,000

Miller Hendry offer tax advice and assistance in relation to Personal Tax advice, Capital Gains Tax planning, Inheritance Tax planning and taxation during the administration of Estates and Trusts. Please contact our tax specialist, Lesley Rance 01738 637311.

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Miller Hendry’s other services includeestate agency, buying and selling property, employment advice, family law, civil litigation, estate administration, trust and charity law, commercial/ business law, debt recovery and much more…

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Succession for unmarried couples has come under the spotlight after a recent landmark decision by the UK Supreme Court which considered the pension entitlement of a cohabitee.

Miss Brewster cohabited with her partner, Mr McLellan, for 10 years before his sudden death in December 2009 at the age of 43. Miss Brewster raised a claim against Mr McLellan’s employer as she was denied the right to receive his occupational pension because she was not his wife and there was no nomination form nominating her to receive it. Miss Brewster argued that the rule discriminated against unmarried couples. The Supreme Court ruled unanimously in her favour, awarding her the right to receive Mr McLellan’s pension.

This decision is a positive step forward for unmarried couples in the UK. However, legal rights for unmarried couples on death are still very limited and offer little protection. Miss Brewster’s case, taking 7 years to resolve, is a prime example of the potential difficulty and expense faced by unmarried couples in inheriting their partner’s estate.

Lindsay Kirkwood, a Solicitor in Miller Hendry’s Dundee office comments, “Cohabiting families in the UK have grown exponentially in the last 20 years, more than doubling from 1.5 million to approximately 3.3 million. Contrary to what is commonly believed, unmarried couples do not have an automatic right to inherit their partner’s estate, unlike married couples. Cohabitation is yet to achieve legal recognition in the UK, and until it does, unmarried couples are left financially vulnerable on the death of their partner.”

In the absence of a Will expressly providing for an unmarried partner, an application to the Court seeking a financial award needs to be made within 6 months of the partner’s death. For a claim to succeed, the Court must be satisfied that the couple lived

together as if married. Many factors are considered such as length of the relationship, emotional commitment, children and shared finances. It can be difficult for younger and newer couples to prove that they lived together as if married. If the claim fails or the time limit is not met, the deceased’s estate will pass to a spouse (if the deceased is not divorced from their ex-husband/wife) or pass to blood relatives under current succession rules.

Lindsay also added, “I would strongly advise unmarried couples to either make a Will or review their current Will to provide for partners on death. Couples should also check nomination forms for their pension and death in service benefit, and not make assumptions about who will inherit these. This is the only way unmarried couples can ensure financial security on death under current rules.”

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R I G H T S O FC O H A B I T I N G C O U P L E S

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After taking part in the most recent Will Aid campaign, Miller Hendry raised £4645 for nine of the UK’s best loved charities – SCIAF (Scotland), ActionAid, Age UK, British Red Cross, Christian Aid, NSPCC, Save the Children, Sightsavers and Trocaire (N. Ireland).

Anthony McVeigh, from the Scottish Catholic International Aid Fund (SCIAF), visited the firm to present partners and staff with a certificate to thank them for their support. The firm has taken part in Will Aid every year since 1996 and, in that time, has raised an impressive £79,503.

Every November, participating solicitors waive their fee for writing a basic Will. Instead, they invite their clients to make a donation to Will Aid. The recommended donation for a basic Will Aid will is £95 for a single will and £150 for a pair of mirror wills.

Ernie Boath, Partner and Head of Private Client Department, commented: “Everyone at Miller Hendry is very passionate about raising money for all these fantastic charities through Will Aid and we are very proud of the amount we have raised over the years. We were delighted that Anthony was able to join us for our celebrations and our certificate will take pride of place in our reception areas for all our clients to see.”

Will Aid takes place in November each year and is the ideal opportunity to make a Will.

Mr Boath continued: “People are often unaware of the difficulties they can be leaving behind for loved ones if something were to happen to them. Wills give people peace of mind that their families are taken care of and it is the only way to put you in control of your estate after death. Will Aid also allows people to donate money to charity which is all the more reason to consider making that all-important Will. The team here at Miller Hendry will certainly be fundraising again for the next campaign.”

Anthony McVeigh (SCIAF) said: “The team at Miller Hendry have really embraced the Will Aid campaign and their efforts are greatly appreciated. The money raised will go towards helping families in some of the poorest communities around the world. With a gift of £120 we can give goats to four families. A goat will give them up to 12 pints of fresh milk a week and they can sell any extra milk to buy other food.” “I would like to offer my heartfelt thanks to Miller Hendry and let them know that thanks to them, lives will change for the better and people who need it will continue to receive the help and support that the charities work so hard to provide.”

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W I L L A I D S U C C E S S !

A recent English case has highlighted the importance of taking professional advice when preparing your Will.

Raymond White was diagnosed with terminal cancer in 2010. Shortly before his death, he instructed a firm of solicitors to draw up a Will for him, which left the bulk of his estate to his daughter from a previous marriage. His second wife raised a court action challenging it, claiming that at the time the Will was made Mr White was suffering from the side effects of palliative drugs and did not understand the document he was signing.

Mhairi Cage, an Associate Solicitor based in Miller Hendry’s Perth office commented, “In order for a Will to be valid, it is essential that the person making it has capacity – the ability to understand what they are doing. Capacity can be affected by many things, including dementia, strokes, brain injuries and indeed certain medication.”

Mrs White argued that her husband did not have capacity when he instructed and signed his Will because the drugs he was receiving affected his

mental state. The Court disagreed, and found in favour of his daughter.

In reaching his decision, the judge gave particular weight to the evidence of the legal executive who had prepared the Will. She had kept notes about her meetings with Mr White and was satisfied that he understood his decisions. Her evidence appears to have been preferred to that provided by some of the doctors who had been caring for Mr White.

Mhairi added, “If you or someone you know are considering making a Will, and there are concerns about capacity, you should contact a solicitor as soon as possible. Time can often be of the essence in these situations.”

“Not only can your solicitor keep written records of their own views on your capacity, they can also help instruct medical reports where a second opinion is felt necessary. This information can be critical if a Will is later challenged, and may ensure that your wishes are followed.”

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M A K I N G A W I L L

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Miller Hendry is a long established legal and estate agency practice which has served individuals and businesses in the Tayside and Strathearn area for generations. The firm has grown to be one of the largest legal practices in the area. Our staff include highly professional solicitors and legal staff, trust and tax specialists, property valuation managers and sales negotiators who are all equipped to provide a complementary blend of specialist and more general expertise in various fields.

We continue to try to shape in a proactive way the services we provide to meet the ever changing needs of our clients. Whatever the problem, be it personal or business, large or small, routine or complex, it will be given individual attention and will be handled according to the highest professional standards.

Editor: Caroline A Fraser

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F I R S T A N D F O R E M O S Ty o u r i n t e r e s t s

This leaflet is a general discussion document and is for guidance only. It is not a substitute for legal or financial advice.

Each situation must be looked at it its own right. You cannot rely upon points raised and should always seek advice specific to your own circumstances.

K E Y C O N T A C T S

Ernest Boath ernestboath@millerhendry.co.uk

John Thomjohnthom@millerhendry.co.uk

Donnie MacLeoddonniemacleod@millerhendry.co.uk

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