Recent News
Janet Ball
Janet left Harold Bell & Co at Christmas after more than 15 years as our receptionist. Janet is, and will be, sorely missed. Her organisational skills and systems will leave a long term legacy. Who will we tease now she is not here. She will have to come back often. Good luck Janet and keep in touch!
- Inheritance Tax
- Capital Gains Tax (CGT)
- Home Information Packs (HIPs)
- Stamp Duty Land Tax (SDLT)
- Lasting Powers of Attorney
St Raphael's Will Week
For a number of years we have assisted St. Raphael’s Hospice, (local and very worthwhile and under-funded), by doing a Wills week. Last year we raised over £1,700 for them.
This year, between the 10th and 21st May, we have again agreed to draft wills for clients both new and old at no cost, in return for a donation to the hospice.
Inheritance Tax
On 9 October 2007 the Chancellor, Alistair Darling, as part of his Pre-Budget Report and Comprehensive Spending Review, introduced a number of changes to the rates and method in which various taxes are charged. To list all of these changes would require an entire website dedicated purely to this and so instead, we have listed the changes which we believe will be of main interest to our clients, namely Inheritance Tax and Capital Gains Tax.
Before the Pre-Budget Report any individual was entitled to a £300,000 allowance (Nil Rate Band) on his or her death. This has since been increased to £325,000 in April 2009. This meant that assets below the Nil Rate Band were taxed at 0% and everything exceeding £325,000 was taxed at 40%. Anything passing between spouses or civil partners on death was covered by spouse/civil partnership exemption and hence no Inheritance Tax was payable. What this generally meant was, where the first spouse died leaving everything to the other spouse and the surviving spouse later died, their estate would consist of the amalgamated assets but would still only be entitled to the £325,000 allowance.
Couples therefore needed to take advantage of the £325,000 allowance on the first person’s death so as to ensure that the surviving spouse’s estate was either kept below the threshold or alternatively was significantly reduced to reduce the amount of Inheritance Tax on their death. This generally involved the drafting of a Nil Rate Band Discretionary trust or an absolute gift of the half share of the property (having first transferred their property into Tenants in Common).
Following the Pre-Budget Report the above planning is not so necessary. The Chancellor introduced a method of “transferring” the Nil Rate Band from spouse to spouse or civil partner to civil partner. What this now means is if a spouse or civil partner dies leaving everything to their spouse/civil partner then on the surviving person’s death they are entitled to a £650,000 Nil Rate Band. However, this allowance is only for spouses and civil partners and not co-habitees. This allowance is only applied if the surviving spouse/civil partner dies after the 9 October 2007. It is, however, applied retrospectively so that if the first spouse/civil partner died before this date the new Nil Rate Band would apply.
This new regime will assist most couples to avoid Inheritance Tax and to ensure that their beneficiaries receive their maximum entitlement but this may not always be the case and our staff will gladly advise you of other methods to ensure your estate is tax efficient.
Capital Gains Tax (CGT)
Whilst we do not seek to be experts on tax, the recent pre-budget speech has caused uncertainty in relation to CGT. The long term holder of assets is likely to suffer to the benefit of the short term investor. The law has still not received Royal Assent. This topic is likely to alter but it does now seem that the straight 18% charge on all gains, with no reliefs in respect of ownership, will come into effect at the beginning of the fiscal year.
Home Information Packs (HIPs)
These are the hot topic. It is an offence to “market” your property without a HIP. The Government has recently announced that all houses fall within the definition. It is not as frightening as you may think. We can prepare your HIP for you as part of acting in your sale and purchase. What it costs you as a seller will be saved by you as a purchaser. The HIP only has to be “requested” for you to be able to market your property. Ring for advice.
Stamp Duty Land Tax (SDLT)
Whilst not recent news, Stamp Duty was replaced by SDLT some years ago. The effect of SDLT however is wide ranging. As a tax on transactions, rather than documents, clients and solicitors must be aware that any transaction might be viewed in conjunction with another which could subsequently give rise to SDLT (for instance marriage might make a previous unconnected transaction, connected). Any transaction, however simple it may seem, always needs to be given serious thought. Leases and rent, particularly in commercial matters, are particularly at risk.
There is sometimes a misunderstanding about the amount of SDLT on domestic properties.
Up to £175,000 (£125,000 from 2nd September 2008) you pay no SDLT on the purchase price.
From £175,001 to £250,000 you pay 1% SDLT on the whole purchase price.
From £250,001 to £500,000 you pay 3% SDLT on the whole purchase price.
From £500,001 and upwards you pay 5% SDLT on the whole purchase price.
Please note that the lower limit of £175,000 is a temporary concession replacing the lower limit of £150,000. It will revert to that on the anniversary of the concession which was brought in on the 2nd September 2008.
If the property is leasehold and rent is payable, there may be SDLT on the rent as well, even if there is none on the purchase price.
For further information please see the web site of HMRC: www.hmrc.gov.uk/so/index.htm
Lasting Powers of Attorney
On 1 October 2007 Lasting Powers of Attorney replaced Enduring Powers of Attorney. A person given power or who has drawn up an Enduring Power of Attorney before 1 October 2007 can still use it and the attorney can still apply to have it registered in the usual fashion. This person has a duty to apply to register the Enduring Power of Attorney as soon as they believe that the donor is becoming or has become mentally incapable of managing their affairs.
The Lasting Power of Attorney is a legal document that lets you appoint someone you trust as an ‘attorney’ to make decisions on your behalf. It can be drawn up at any time while you have the mental capacity, but, unlike the Enduring Power of Attorney, cannot be used by your attorneys until it is registered with the Office of the Public Guardian.
A registered Lasting Power of Attorney can be used at any time, irrespective of whether you have the mental capacity to act for yourself or not.
There are two types of Lasting Powers of Attorney: 1. Property and Affairs Lasting Power of Attorney: This is similar to the previous Enduring Power of Attorney in that, as the name suggest, it covers your property and finances. 2. Personal Welfare Lasting Power of Attorney: This allows you to make decisions regarding the type of treatment you consent to when you do not have the mental capacity to do so and can include such things as life-sustaining treatment etc.
The Lasting Power of Attorney forms are substantially longer than the previous Enduring Power of Attorney forms but our staff will be happy to advise you of the key differences.