No Fault Divorce

No Fault Divorce

Divorce is never an easy option, whether our laws require fault or not.  Laura Harwood, from our Caterham Branch, has written this article suggesting that the proposed no-fault divorce should assist in creating a collaborative approach to separation which in turn can be of particular benefit to any children of the family.  Studies have shown that child arrangements made through discussion and mediation are more likely to be kept and the children have a better relationship with the non-resident parent.

Moving to the UK: How to be a Prudent Tenant?

Moving to the UK: How to be a Prudent Tenant?

Despite the Brexit talks and deadline of March 2019, there is still a considerable number of migrants entering the UK for a long term stay or with a view to settle here. Claire d'Humilly (our native French-speaking Solicitor) provides some guidance on ensuring that you enter into an Assured Shorthold Tenancy for your legal protection and peace of mind. English version will be published shortly. 

Emménager au Royaume-Uni: Soyez un locataire prudent

Emménager au Royaume-Uni: Soyez un locataire prudent

Despite the Brexit talks and deadline of March 2019, there is still a considerable number of migrants entering the UK for a long term stay or with a view to settle here. Claire d'Humilly (our native French-speaking Solicitor) provides some guidance on ensuring that you enter into an Assured Shorthold Tenancy for your legal protection and peace of mind. English version will be published shortly. 

Claire is a Solicitor qualified to practise in England and Wales. She specialises in Corporate/Commercial matters, immigration and landlord and tenant litigation. 

22 Questions You Must Ask If You Are Buying A Flat

So you have decided to buy a flat or a leasehold property. Below are some questions we suggest you ask the seller or the estate agents so that you know what you are getting into.

  1. How long is the lease?

  2. How much is the ground rent? When is this paid?

  3. Is the ground rent to be reviewed periodically? If so, when is the next rent review date? If the future rent known?

  4. Are there any common areas? If so, how are the common areas maintained?

  5. Who insures the whole building?

  6. How much is the service charge? Ask for a copy of the latest service charge accounts.

  7. What are the parking arrangements?

  8. Are pets allowed?

  9. Is there an age restriction for residents?

  10. Am I allowed to rent out the property? If so, are there any fees payable to the management company or the freeholder?

  11. Do I need permission to do works on the property?

  12. Is there a residents’ association?

  13. Do I become a director/shareholder of the residents’ management company?

  14. Are there any major works planned in the future with regard to the common areas or the building which you may be responsible for? If so, what works are planned?

  15. Is there a reserve or sinking fund to offset future major works?

  16. Are service charge monies kept in a separate trust bank account?

  17. Is the managing agent a member of a recognised trade or professional body?

  18. Has a fire risk assessment of the common parts been carried out?

  19. Has an asbestos survey been carried?

  20. How many leaseholders are in arrears for their service charge payments?

  21. Can I run my business from my flat?

  22. How much are the council tax and utility bills?

More about this:

If you’d like to know more about buying a home, call Delfin Posada on 020 37443800.

*Delfin Posada is a Partner at Posada & Co Solicitors and Beach Law and has been advising individuals and families for over 15 years. Delfin is passionate about helping individuals and families achieve their aspirations and objectives through sound estate and succession planning, family and business governance and inter-generational wealth transfer.*

How do I plan for Inheritance Tax?

How do I plan for Inheritance Tax?

In this article about Inheritance Tax, Delfin Posada writes: "Over the years, I have also acted for clients who wish to prepare for the future and ensure that their wealth is preserved for their family. Many of these clients often ask me, “how can I prepare for inheritance tax?”"  

Read this article to find out how you can prepare yourself and your family for Inheritance Tax.

I am living with my Partner. What are my rights?

I am living with my Partner. What are my rights?

In this blog article, Delfin Posada and Parul Jhalla discuss the importance of Cohabitation Agreements and Wills for unmarried couples who are living together. 

Delfin is the founding partner of Posada & Co and has been advising private clients and families for nearly 20 years. Parul is the firm's Family Law specialist and has over 30 years experience in advising cohabitting couples. 

Estate Planning

Estate planning is an effective way of arranging your affairs in order to minimise how much tax you are liable to pay. There are two taxes to consider in the disposal of assets these are Capital Gains Tax (“CGT”) and Inheritance Tax (“IHT”).

CGT is a tax that is charged on “the gain when a chargeable person (a resident of the UK) makes a chargeable disposal (sales of gifts) of chargeable assets (essentially all property, except cars and certain life policies).” CGT is charged at 18% for basic rate taxpayers and 28% for higher rate tax payers, personal representatives of a deceased person’s estate and trustees.

Whereas IHT is a tax on the estate (the property, money and possessions) of someone who’s died. The standard rate of IHT is currently 40% and is only charged on the value of your estate that is above the threshold which is currently £325,000 (“nil rate band’). However, IHT is not payable on the following:

  • The value of the estate is below the nil rate band; or
  • Your entire estate is left to your spouse or civil partner, a charity or a community amateur sports club.

When considering tax planning there are various factors to take into account, in particular:

  1. What property should be used
  2. Who the property should be given to
  3. What is the best way of it being given away
  4. When should the process take place

1. What property should be used

Whilst there are benefits to tax planning it is important to note that once assets are given away they cannot be claimed back.

2. Who should the property be given to?

Gifting property to your spouse or civil partner can be an effective tax planning strategy. In addition, it provides financial security, particularly if one of you earns less. An example of this is transferring assets to another in order to make use of the others annual exemption for Capital Gains Tax (“CGT”) and Inheritance Tax (“IHT”).

Another effective method is to transfer assets that produce income, such as shares, or rental property, to your spouse who is a lower rate tax payer. By doing so you can ultimately increase the overall tax bill between the two of you.

In terms of IHT, as previously mentioned gifts made between spouses are exempt. However, it should be noted that this is limited to £325,000 for transfers from a domiciled spouse to a non-domiciled spouse. It is also important to note if your married or in a civil partnership that any of your unused threshold can be transferred to your partner at the time of your death. As for CGT, there is no immediate CGT payable in relation to transfers between spouses.

Should you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold may potentially increase to £500,000 for IHT purposes.

Other exemptions to CGT include:

  • Wasting assets and chattels such as cars, plants and machinery. Chattels worth less than £6,000 are also exempt which can include items such as jewellery;
  • Hold over relief which is a form of tax postponement, whereby there is no immediate CGT payable and it is differed until the done disposes of the asset. It is important to note however that for CGT purposes the donee will acquire the asset at the donor’s acquisition cost;
  • Principal private residence whereby your main residence is exempt from CGT; and
  • Business reliefs which are only relevant where the focus is more sales and reinvestment than making gifts.

3. What is the best way of it being given away?

There are three methods of giving away property. These are by way of an outright gift, by setting up a trust and transferring property from your sole name into joint names. There are various advantages and disadvantages to each method and the ideal method will depend on the property being transferred and the circumstances. Transferring property by way of an outright gift is often the easiest and most inexpensive method. However, as mentioned once property is given away it cannot be taken back making the method inflexible should there be a change of circumstances. In contrast giving property away through a trust is more flexible and is ideal for individuals with complex objectives. The downside to this method is that it requires professional advice which in turn makes the method more time consuming and costly.

4. When should tax planning take place?

It is important to note that take planning is a continuous process and can take place during a person life by way of lifetime giving or at the time of death through a will or even thereafter by way of a post death variation.

An effective method of tax planning is to make Potentially Exempt Transfers (“PETs”). PETs allow the you to remove assets from your taxable estate during your lifetime. By doing so you can ultimately reduce the amount of IHT payable. However, in order for a PET to be exempt from IHT the donor will have to survive the gift by seven years. Potential obstacles include the reservation of benefit rule and the pre-owned asset rule both of which prevent donors from giving away property which they still retain a benefit from or interest in. There are however exceptions to both rules.

Tax planning can also take place in a will. When drafting a will, it is important to note whether the Nil Rate Band will still be available on death and whether there should be a discretionary trust which could have potential IHT benefit

For more information, please contact our team who will be more than happy to help you.

Appointing Guardians for your Minor Children

In the unlikely event that both parents die before their children have reached the age of 18, parents want peace of mind that their children are well taken care of by people of their choosing.

This can be achieved through the appointing of guardians within a will. As such we have prepared this guide to assist parents with their decision.

Who can be a guardian?

Any individual can be a guardian if they are over the age of 18 and are mentally capable. Whilst most people appoint two people (usually a couple) you can choose up to four people.

Having to decide who is to take on the responsibilities of raising your child(ren) can be one of the toughest decisions a parent can face.

As such set out below are some of the factors we believe parents should consider to narrow down their decision:

• Whose parenting style and beliefs match yours?

• Who is financially capable of taking on the responsibility?

• Is the person physically and emotionally fit for the responsibility?

• Who does your child feel comfortable with?

• Are they planning to have children of their own?

• Do they already have children and will your child/children get along with theirs?

When deciding, it is important to note that guardianship can be flexible and for a specific period. For example, if you want your parents to be your child(ren)’s guardians but are worried about their age a child can be put under their care for a designated period (i.e 10 years) and then a second guardian(s) takes over.

Given that a decision to appoint a guardian is not always binding it is always important to discuss the matters with anyone who could be affected whether directly or indirectly. This is due to the fact that someone could challenge the appointment in court and it would be left to the court to decide who is best placed to act as the guardian.

Whilst separate guardians can be appointed for different children it is often advised that children are kept together in what will already be a traumatic period in their lives.

Finally, to avoid any difficulties it is often advised that couples appoint the same guardian(s).

Who can appoint a guardian?

In accordance with section 5(13) of the Children Act 1989 only the following can appoint guardians:

• A parent with parenting rights for a child. It is important to note that under section 2 of the Children Act 1989 mothers have automatic parent rights, however fathers who are not married to the child’s mother do not.

• The Courts

• A guardian whose appointment has taken place

• A special guardian

How do I appoint a guardian?

The most common way of appointing a guardian is through a will. However whilst being the recommended and preferred way having a will is not a must. For an appointment to be valid it must be documented:

• In writing

• Dated

• And signed by the person making the appointment. However, if made in a will that is not by the testator, it must have been signed at the testator’s direction in accordance with section 9 of the Wills Act 1837.

What happens if I choose not to appoint guardians?

If parents opt not to appoint guardians, then the decision will be left to the Courts. If parents informally agree with friends or relatives about the care of their children, then nobody will have parental rights for the children unless:

• Appointed by the court

• An adoption order is made by the court

• Parental rights are acquired by a step parent whilst married to one of the parents.

When does the appointment take effect?

The appointment only takes effect on the death of the person who made it subject to there being no one with parental rights for the child.

What if there is an unforeseen change in circumstances?

If for any reason there is a change of circumstances or you merely change your mind a new will or documents should be prepared to reflect this. In addition, it is advised that substitute guardians are considered in a will should the situation arise that your chosen primary guardians pass away. By doing so you would avoid the need to draft a new will should this take place.

How will the guardian support my child(ren)?

A guardian will not have an obligation to support a child from his/her own resources. However, this issue can be resolved through a will in one of the following ways:

• By leaving the residue of the estate to be held on trust for the child(ren);

• By leaving a legacy to the guardian(s) subject to the individual becoming a guardian;

• By including a provision in the will that would allow the trusts to make loans to the guardians;

• Including a letter of wishes in making it clear that you would like the trustees to use their powers under the will to support the child(ren).

We hope that you have find our guide useful and if you have any questions or would like to have a will drafted to reflect your wishes or would like to come in for a free will review, feel free to contact us today and we will be happy to assist you.

Budget 2017

Phillip Hammond delivered his first Budget as Chancellor yesterday in what is likely to be the final Budget before the UK gives notice of its departure from the EU by triggering Article 50. When doing so he announced that growth was expected to be higher than the previous forecast with an expected growth of 2% in 2017. His other announcements included:

Tax Implications

The Spring budget was very light on substance for private client practitioners indicating that the Chancellor could be leaving more important policy announcements for the Autumn budget. The Chancellors speech contained little personal tax announcements. However, the consultation which is due to be released on 20 March 2017, is likely to impact private client practitioners when the government will be seeking to extend the scope of corporation tax to non-UK resident companies where they are currently subject to income tax and non-resident capital gains tax.

In the lead, up to the announcement HMRC had confirmed the government’s intention to reduce the time period for the filing of SDLT. However, The Chancellor announced that it is going to delay the reduction of the filing and payment window until 2018/2019.

In relation to offshore property developers it was announced that sections 76-80 of the Finance Act 2016 were to be amended to ensure that as of 8 March 2017, all profits realised by offshore developers, developing in the UK would be subject to tax.

The government confirmed its intention to lower the Corporation Tax Rate from 19% from April 2017 and 17% by 2020. In his speech, the Chancellor confirmed that from April 6, this year the "personal allowance", currently £11,000, will rise to £11,500. The result is that hundreds of thousands of people, including many pensioners, will be taken outside income tax altogether. In addition, it was announced that the CGT annual exemption will rise from £11,000 in 2016-17 to £11,300 in 2017-18. However, one of the biggest money raising measures announced was the reduction in the amount shareholders and directors can receive in dividends without paying tax with the amount reduced from £5,000 to £2,000.

The self-employed in "Class 4" NI contributions will also be paying more tax from April 2018 – the rate will rise by 1 percentage point to 10%, the Chancellor announced. In April 2019, the rate will rise again, to 11%. In contrast to employed workers, who pay "Class 1" NI at 12% on earnings between £8,164 and £45,000. As with the self-employed, they pay 2% on earnings above £45,000.

When delivering his speech, the Chancellor said that all self-employed people earning less than £16,250 will pay less in NI as a result of the changes.

An Increase to minimum wage

It was announced that the National Living Wage is to rise by 4% from £7.20 to £7.50 an hour in order to boost the National Living Wage to the amount set by George Osbourne to £9 by 2020. However, despite the increase there is still a large gap between the Government minimum and our real Living Wage of £8.45 in the UK and £9.75 in London, which is based on what families need to earn to meet everyday costs.

Measures to alleviate the pressures on small businesses

In the lead, up to the Budget, business had been seeking for further relief from the predicted hardship of the re-evaluation of business rates that is due to take place on 1 April. As such The Chancellor announced three principles measures to alleviate the pressures on Britain’s Businesses:

  1. Small businesses were to be given the benefit of a £50 cap per month on the increased rates payable;
  2. 90% of pubs would receive a discount of £1,000
  3. Along with a £300 million to local authorities as a discretionary fund for businesses in their area that would be hit hard by the increase in business rates.

The package is expected to cost the government £435 million however when considering this in detail this provides little comfort with the overall cuts amounting to less than 2% of the total revenue from Business Rates. As such small businesses, would be wise to take financial advice on their future cash flow whilst these measures are in place, given the fact that they are unlikely to permanent.

Transport Spending

Transport spending comprising of £90 Million to the North and £23 Million to the Midlands. In addition, a further £690 Million will be allocated to local authorities to tackle urban congestion and to support local transport networks.

School Maintenance

School maintenance comprising of £320 million on 140 new free schools and £216 million is to be spent o help rebuild and refurbish existing schools.

Rent a room relief

The government has announced that it will consult on proposals to redesign rent a room relief. No timeframe for the consultation or any proposed legislative changes is given.

The government believes that the relief, which is available to individuals who rent out furnished accommodation in their only or main residence and is intended to improve the supply of affordable, long-term lodgings, should be better targeted at long term lettings.

Deputy Orders

What is a Deputy Order?

A Deputy is a court appointed individual, given the authority by the Court of Protection, to make decisions for someone who lacks capacity, to ensure the well management of their day to day affairs.

Deputy Order a Lasting Power of Attorney?

A Deputy Order, similar to its cousin, the Lasting Power of Attorney, allows an individual to make decisions around the health and welfare or/and property and financial affairs of the person lacking capacity.

When a person is deemed to have lost capacity, it can be difficult for friends and family members to gain access to bank accounts to pay for care, or to make decisions involving medical treatment without a Lasting Power of Attorney or Deputy Order.

However, obtaining a Deputy Order is a lengthy process, and dissimilar to the Lasting Power of Attorney, the application is made once a person has lost capacity. Applications can take up to six months and this is largely dependent on the external factors, such as receiving doctors and hospital reports, required for assessing capacity. The Court uses the statements made by medical professionals in these reports to decide whether an individual has capacity and whether appointing a Deputy is in their best interest.

Given the nature of a Deputy Order and the fact the decision to appoint a Deputy is not made specifically by the person lacking capacity, it requires more stringent checks and is more expensive than a Lasting Power of Attorney.

The Court of Protection are very involved with the Deputies and their management of affairs and from the moment they are appointed, they are made aware of their responsibilities. Deputies for Property and Financial Affairs, must also pay a security bond (the Court decides whether this is a yearly fee or a one of fee) which provides insurance cover.

Procedure involved:

The appointment of a Deputy is done through various application forms that look at the personal circumstances of the person lacking capacity and the person applying to be Deputy. Accompanying forms made by medical professionals must also be submitted, to show that an individual is lacking the capacity and indeed requires a Deputy Order.

Special Decisions:

To make a one off decision such as selling a property, a Deputy must apply to the court for a supplemental order. Once the initial Deputy Order is received, the time period it takes to gain the supplementary order for the one off decision, is, in usual circumstances a shorter process.

While it is sometimes unavoidable to have to apply for a Deputy Order, it is highly recommended to have a Lasting Power of Attorney in place. Not only does this ease the financial burden of having to apply for a Deputy Order, but it also provides certainty for the future, meaning that your friends and loved ones are not put in a position where they having to apply on your behalf. The Lasting Power of Attorney also has an option that allows you to remain in control until you are deemed to have lost capacity. This allows you the freedom deciding who acts as your attorney and how decisions are made (joint or separately).

Please feel free contact us if you wish to discuss Lasting Powers of Attorney and Deputy Orders.

Legal Tips for Start-Ups

Legal Tips for Start-Ups

Whether you have found the perfect business idea or always dreamed of starting your own company, there are a few essentials you will need to consider in order to protect yourself and help your business grow. 

We’ve set out the “Legal Fundamentals” for you:

Business Structure: Registration and Shareholders’ / Partnerships’ Agreement

The steps to undertake will depend on your chosen business model, eg. Whether you intend to practice as a sole trader, create a partnership or create a limited company.  For each business medium, there will be a registration process to undergo, with Companies House and / or HMRC.

If you decide to team up in your business venture, one thing you’ll need is a contract with your business partner.  For instance, the law defines a partnership as “the relation which subsists between persons carrying on a business in common with a view of profit”.  It is therefore very simple to be bound by the legislation on Partnership and without a Partnership Agreement, the applicable law is the Partnership Act 1890.  We would therefore recommend that you take the pre-emptive steps to get a contract between you and your business partner(s) rather than being bound by a law that is now 127 years old!  If you decide to set up a company limited by shares, we would recommend a Shareholders’ to protect your business and your respective rights and obligations as shareholders.   

Insurance:

Getting the right and adequate insurance for your business will be one of the most, if not the most, important fundamental when setting up your business. 

Insuring adequately your business from the outset will ensure that you and your business are covered against any claims from customers, suppliers or even your employees, limiting and covering your public liability, employer’s liability and so on.  

Business Premises:

Start-ups don’t always require renting out premises from day 1.  And for a fact, today’s most profitable companies such as Amazon, Apple or Google started off from their funders’ garage.  But whether you are thinking of expanding or that you require business premises to carry out your business, we would recommend that you seek legal advice in relation to your commercial lease to avoid surprises as to any increase in rent, requirements for planning permissions or even the condition of the premises.

Protecting your brand:

Starting a business is also building a business around an idea and develop one’s brand and value.  A brand is for most customers, the guarantee of that company’s quality, that one has worked hard to develop and establish.  In order to protect your business and its brand, we would strongly advise that you take all necessary steps to protect your business’s Intellectual Property Rights: registering trademarks, designs, patents for instance and asserting your ownership against any third party who may want to use, abuse or steal them.  By taking steps to protect and register your Intellectual Property Rights, it will be much easier to assert your ownership over these, whenever it will become necessary.  Additionally, you will also be able to grant licences to use your Intellectual Property Rights, franchise them or even sell them at a later date.

 

Service contracts / Terms & Conditions:

Whether you supply goods or services, a contract with your customers and suppliers will be crucial to limit your business’ liability and ensure that all parties are aware of their respective obligations.  You do not want to skip this Fundamental and for example, you do not want to be left out without remedies against an unsatisfied or dishonest customer. 

Employment Contracts & Pensions:

Finally, if you hire employees, you will require Employment Contracts to comply with Employment Law, your employees’ rights and make sure that your business abides by any statutory obligations.  Employment Contracts are also a protection for your business with regard to post-termination restrictive covenants or confidentiality clauses.

Small businesses’ requirements to set up a pension scheme for their employees will also become compulsory from April 2017, don’t forget about it! 

If you need further advice, please do not hesitate to contact us for further advice.