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Private Client Law

In this monthly bulletin the Private Client team keep their referrers and contacts up to date with the latest legal and tax developments which also includes regular updates on Family law matters.

Latest Issue

In the latest issue of our Private Client Law bulletin we look at the implications from Brexit for private client and family law matters.

Follow this link to read Paula Milburn's blog on how Brexit will affect family law proceedings.  

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Brexit - Private Client matters

Wednesday 6th July 2016

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Private Client Law Bulletin - Issue 100

Following the Brexit result we provide an update on the EU Succession Regulation and the issues around Inheritance Tax.
The UK had already opted out of the EU Succession Regulation (Brussels IV) some years before Brexit. The Government had felt that it could not implement provisions that harmonised succession laws across the EU as they may have a detrimental impact on lifetime gifts and land registration. The need to appreciate the fundamental impact of Brussels IV on those from the UK with assets in the other parts of Europe and foreign nationals with assets in the UK however remains and cannot be ignored post EU membership.
The controversial “emergency budget” referred to by the Chancellor before the Referendum vote was announced apparently included proposals to increase the Inheritance Tax rate from 40% to 45%. This could have led/could lead those with assets above the inheritance tax threshold (£325,000) to make gifts to family earlier than they otherwise might in the hope of surviving 7 years and so reducing the amount to be taxed. The effect of a reduction in the value of estate assets though, if any economic downturn materialises, could have a neutralising effect so far as Government finances are concerned.  Those paying inheritance tax could end up paying proportionately more, so increasing the need to consider timely estate planning.
If you would like to discuss any issues about these areas, or for any other matters of concern, please do not hesitate to contact our Private Client team.

Brexit - Family law implications

Wednesday 6th July 2016

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Private Client Law Bulletin - Issue 100

Helen Marriott from our Family Law team takes look at the Brexit implications for family law in her blog post.

Making a will: Five key reasons why it’s so important to have one and avoid the pitfalls of intestacy

Tuesday 24th May 2016

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Private Client Law Bulletin - Issue 99

Over the last five years the number of enquiries about people who have died without making a will has more than doubled, Citizens Advice says. It can cost thousands of pounds to sort out, people you might not even know very well may receive part of your estate and those you wanted to leave something to might miss out or receive considerably less.

In this article, Partner Duncan Bailey, takes a looks at five key reasons why making a will is so important and the problems that arise if you don’t. 

1. You decide who inherits your assets

  • Without a will, something called the intestacy rules dictate who gets your estate and this may not be the people you would want or possibly not in the proportions you would like. A surviving spouse may not receive the whole of the estate and will instead, have to share with the children and fight out between them who gets what. An unmarried partner does not automatically receive anything. Both of these can cause serious unintended financial problems for the surviving spouse or partner.
  • Also, specific assets will not pass to particular people you might have wanted to inherit whether that be personal items or even a family business. Proper planning can help a family business survive when it passes to others.
  • A will enables you to leave specific legacies of money or items to specific people including charitable bequests, none of which would otherwise occur.
  • Prince didn't have a will and now there are all sorts of relatives saying they are entitled to inherit which may not have been what he would have intended or envisaged.

2. Avoid paying unnecessary Inheritance Tax

  • A properly structured will can enable you to utilise and maximise reliefs against Inheritance Tax such as the nil rate band, the new residential nil rate band and business property relief. These alone can save hundreds of thousands of pounds in otherwise unnecessary Inheritance Tax.

3. Control - you dictate who deals with your estate

  • You will select who you want as your executors (the people that administer your estate), your trustees if there is going to be a trust under your will and even guardians for minor children. Often a surviving spouse or partner don’t want to have to deal with administering the estate at a time of grieving or are not best suited for this technical task. Also, being an executor can be a thankless task, fraught with potential issues and can cause tension between family members in carrying this out at an emotive time. A friend or a professional are often pointed either instead or in conjunction.

4. Ensure your children inherit all you intend them to

  • Leaving all of your estate to a spouse or partner relies on them passing this on to your children. If they were to re-marry or enter into a relationship with someone after your death, they may leave their (and by this stage your) estate to their new partner which can result in you disinheriting your own children. This is particularly problematic with second marriages with children from previous marriages and relationships.
  • Leaving assets to children at a stipulated age can protect them and the money from being inherited too early.
  • A trust can help protect the inheritance from your children getting divorced and their spouse walking away with half. No-one seems to think their children will get divorced but half do - it could be you!
  • Not leaving the whole of your estate directly to a spouse can also help to protect against it all going in care home fees and a trust in your will can help with this.

5. Cost and easing the burden on you and your family

  • Whether you realise it or not, not having a will or one that is out of date does play on your mind.
  • A will makes it much easier for your family or friends to sort everything out when you die – without a will the process can be more time consuming and stressful.
  • Part of the process of making a will involves looking at your estate planning, powers of attorney and the like which is also highly valuable and important.
  • Extra cost of administering an intestate estate often greatly exceeds the cost of making a will.
  • Making a will is easy and in doing so helps avoid family disputes as it affirms what you actually want to do with your estate.

Need advice or wish to talk to us?

If you would like more information about wills and estate planning please contact Duncan Bailey or your usual Brabners contact:

Duncan Bailey

Head of Private Client - Liverpool
Tel: 0151 600 3451

Additional residential property: A look at some practical points for the extra 3% Stamp Duty Land Tax

Tuesday 24th May 2016

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Private Client Law Bulletin - Issue 99

From 1 April 2016 the rate of SDLT on acquisitions of “additional” residential property increased to 3 percentage points higher than standard SDLT rates.

Here we take a look at some practical points for you to be aware of if you are considering to buy, or are in the process of purchasing, an additional residential property.

The change was widely anticipated, following a short consultation process towards the end of 2015, and it applies to most acquisitions of residential property where the purchaser owns two or more residential properties (and is not replacing their main residence).

The Government’s stated aim is to discourage the purchase of buy-to-let and second homes, to try and assist first time buyers and existing home owners looking to move.

Whilst the change was widely publicised, some of the practical detail only emerged following the Budget on 16 March 2016 when the relevant legislation and guidance was published by HMRC.

Some interesting points to note are:

  • The 3% surcharge will generally apply to any purchase of residential property by a corporate entity;
  • There is no exemption for larger residential property developers or residential property investors;
  • Multiple dwellings relief (“MDR”) can still be claimed where the conditions are satisfied, however the 3% surcharge will then be applied to the applicable SDLT rate;
  • Where six or more dwellings are acquired in a single transaction the purchaser can elect to apply the non-residential rates of SDLT (now with a top rate of 5%), or instead make a claim for MDR (with the 3% surcharge applying);
  • Where a main residence is being replaced but the new home is acquired before the sale of the existing home, the purchaser will have 3 years to sell their existing home to avoid being caught by the new 3% surcharge;
  • Unfortunately, in these circumstances, the 3% surcharge will need to be paid up front and then reclaimed at a later date, if (and when) the existing home is sold within that 3 year period;
  • If residential property is being acquired by joint purchasers (for example family members) then the 3% surcharge will generally apply if any of the joint purchasers owns additional residential property;
  • Even though SDLT only applies to acquisitions of UK property, any overseas residential property will have to be taken into account when determining whether “additional” residential property is being acquired in the UK;
  • Transitional rules apply, so that if contracts were exchanged on or before 25 November 2015 (but complete on or after 1 April 2016) the higher rates will generally not apply.

Given the new 3% surcharge it is important to consider SDLT at an early stage in any proposed acquisition of residential property. It may be possible to make certain changes so that higher rates do not apply, or other reliefs may be available to lessen their impact.

Need advice or wish to talk to us?

If you would like to discuss any property purchase matters and tax options please do not hesitate to contact our tax expert Mark Whiteside: 

Mark Whiteside

Partner, Corporate
Tel: 0151 600 3269


Disclosure of tax avoidance schemes (DOTAS) - further consultation published on revised IHT hallmark

Tuesday 3rd May 2016

Private Client Law Update

The government has published a consultation document with an amended version of the revised inheritance tax (IHT) hallmark for the disclosure of tax avoidance schemes (DOTAS) regime. This version is simpler than the previous one and a requirement for artificiality (in the form of contrived or abnormal steps) makes it less likely that uncontroversial tax planning will be caught. However, the revised hallmark is still very much wider than the current one. Uncertainties also remain about how the DOTAS notifiability test should be applied when the revised hallmark is incorporated.

The closing date for comments is 13 July 2016. The government intends to lay regulations introducing the revised IHT hallmark in 2016, but does not indicate when they will come into force.

You can read more about this by visiting the government's website here.

Need advice or wish to talk to us?

If you would like discuss any matters about these changes please do not hesitate to contact:

Duncan Bailey

Head of Private Client - Liverpool
Tel: 0151 600 3451

Pension offsetting on divorce - the art of comparing apples to pears

Thursday 21st April 2016

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Private Client Law Bulletin - Issue 98

During the course of a marriage, pension funds build up over time and they are often a major asset which must be considered on separation and divorce. As part of the divorce process the court can make ‘pension sharing orders’ which allow the transfer of part of a pension fund to an ex-spouse to achieve equality of pension income in retirement. A report by a pension expert can be very useful in calculating the appropriate mechanisms and amounts for such transfers. 

However, there are circumstances where pension sharing orders are not appropriate, for example where such a transfer would have severe tax consequences. In those situations consideration must be given to how the pension fund should be shared by instead offsetting its value against the other assets that are available. In those instances it can be particularly difficult to put a value on a pension fund which can be fairly translated, compared and offset by other assets. 

Cash equivalent value

This was the focus of the recent case of WS c WS [2015] EWHC 3941 when a pension sharing order was considered not to be appropriate because it would take the husband over his pension lifetime allowance. Also, in this particular case, the other (non-pension) assets were valued in the region of £12.3m. This was not therefore a case where ‘need’ was considered to be a determining factor and it was therefore not correct to share pension funds on the basis of equalising pensionable income. 

The husband and wife therefore agreed that the correct approach was to offset any disparity in pension funds with a corresponding unequal division of other available assets. In this case:

  • The husband had a pension with a cash equivalent value (CE) of £970,000. This was made up of a defined contribution pension in a SIPP and a small money purchase pension plan.
  • The wife’s pension was a defined benefit scheme based on her final salary. The CE of the wife’s pension was circa £3m.
  • Both the husband and wife had already taken their respective 25% tax free lump sums.
  • Due to recent legislative changes, the husband was now able to withdraw his pension funds as cash subject to tax.
  • The wife’s pension fund was linked to RPI, taxed at source and provided her with an income of £50,000 net per annum. 

It was argued, on behalf of the wife, that CE values were primarily of assistance in cases when a pension sharing order is made and that the CE values of the pensions should not be treated as an equivalent to cash for the purposes of offsetting in this case. This was because the pension funds were so fundamentally different that it was not like for like and to do so was to effectively compare “apples and pears”. It was also said that the nature of the wife’s CE value was “illusory” given that it had increased by £630,000 in less than 3 years, whilst the wife had received payments from the fund and had got older. 

The ‘Duxbury calculation’ method 

The wife therefore suggested that when looking at the amount the husband should receive by way of offsetting, the appropriate method to use was a ‘Duxbury calculation’ which considers the income that can be produced by lump sums of money. Family practitioners are very familiar with Duxbury, as it is often used in financial proceedings on divorce to work out the appropriate lump sum that can be drawn down by an ex-spouse for the rest of their life (e.g. a lump sum in lieu of regular spousal maintenance payments). 

In contrast, the husband proposed several alternative methods to calculate the appropriate offsetting figure required. One of the suggestions was to treat the CE value as a cash value and complete calculations based on annuity rates.    

The judge decided that he preferred the wife’s approach and used a traditional Duxbury formula to calculate the appropriate payment for offsetting. It is important to note here that a request, made by the husband, for an expert’s report to calculate the appropriate figure for offsetting using alternative methods was refused by the Court at an earlier hearing, so the judge did not have the benefit of having a pension expert’s calculation to hand. 

Future decisions and how they could impact

Whilst this case is indicative of a move towards this approach in some circumstances, it is unlikely to find favour in all cases, particularly those which are needs based and where the parties still have reasonable pension provision. In those scenarios, a pension expert’s report on equality of income can be greatly beneficial in deciding how pensions should be shared on divorce, with a view to equalising pensionable income on retirement. 

Need advice or wish to talk to us?

If you would like to discuss any matters about divorce and financial issues surrounding relationship breakdown please contact:

Leanne Instrall

Solicitor, Family
Tel: 0161 836 8916

Proposed hike in Grants of Probate fees

Tuesday 1st March 2016

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Private Client Law Bulletin - Issue 97

The Ministry of Justice has issued a consultation paper outlining proposals to hike the cost of obtaining Grants of Probate.
The current cost is a flat fee of £155 when done through a solicitor.
The proposal is to exempt very small estates from any fee but massively increase the fees for estates over £50,000 from a starting fee of £300 to £20,000 for estates over £2 million.
The consultation closes on 1st April and it is likely there will be many responses to such a radically large increase.
One of the implications for such a large increase could be where estates are property rich but cash poor, requiring short-term loans for executors to administer the estate before they have the Grant of Probate.
In the table below we show the proposed application fees:

Value of Estate
(before Inheritance Tax)

Proposed Fee
Up to £50,000 £0
Exceeds £50,000 up to £300,000 £300
Exceeds £300,000 up to £500,000 £1,000
Exceeds £500,000 up to £1m £4,000
Exceeds £1m up to £1.6m £8,000
Exceeds £1.6m up to £2m £12,000
Above £2m £20,000


If you would like to discuss the implications of this increase, or for any other private client law matter please contact:
Partner, Private Client
Tel: 0151 600 3451


Changes to stamp duty rates on second homes and buy-to-let properties - key points from the Autumn Statement

Friday 27th November 2015

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Private Client Law Bulletin - Special Issue 96

In the biggest shake up to the stamp duty system since the thresholds were reformed in December 2014, following the Chancellor’s Autumn Statement as of April 2016 landlords and those looking to purchase a second home will now face a 3% surcharge on the rate of stamp duty payable for their property transaction.

At the moment following the reformation of the stamp duty rates a buyer of a property at £275,000 can currently expect to pay £3,750 in tax. However, as of April next year if that buyer was purchasing the property as a buy-to-let investment or a second home then they can expect a tax bill of £10,800. 

The Chancellor has said that this additional surcharge will raise an additional £1bn for the Treasury by 2021. Industry experts warn that this additional tax blow could result in a reduction of investment in the buy-to-let market. This comes at a time when landlords are already facing a lower rate of tax relief on mortgage payments made on buy-to-let properties as well as changes to the capital gains tax rules, which will require them to pay any Capital Gains Tax (CGT) due within 30 days of selling a property.

Tax advice

However, those looking to invest in property after April 2016 would be advised to take tax advice as it may be possible to offset the additional stamp duty payment against any future CGT liability. In addition commercial property with more than 15 properties in their portfolio are expected to be exempt from the new stamp duty charge.

As for whether this change to the stamp duty thresholds will have a serious reduction in the amount of investment in the property market remains to be seen. The chancellor is clearly banking on there being sufficient momentum in this sector to weather the tax increase, and let’s not forget that prior to the stamp duty threshold reforms last year landlords were still prepared to pay the higher “slab rates” of tax that had previously been payable. One effect that is likely to be seen in the short term is that the property market will become inflated in the run up to this change as buy-to-let investors look to acquire properties under the current tax regime.  

If you would like to discuss your estate planning requirements please do not hesitate to contact Louise Scholes or your usual Brabners contact:

Louise Scholes
Senior Associate - Private Client
Tel: 0151 600 3278

Supreme Court decision serves as reminder that honesty is the best policy

Wednesday 25th November 2015

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Private Client Law Bulletin - Issue 95

In Family Court proceedings divorcing couples are encouraged to agree the division of their assets but they can be drawn into adversarial court battles. There is a duty of full and frank disclosure on spouses to provide complete and honest information about their assets. This duty is integral to the process, as how can one spouse decide whether to accept a financial settlement without all the cards being on the table? 

In Sharland v Sharland the husband and wife reached a financial agreement during the final Court hearing, after they had each given evidence about their assets. Their agreement was drawn up into a consent order and presented to the Court for approval, as all orders must be approved by the Court. 

The husband and wife's financial agreement was reached on the basis that there was no imminent initial public offering (IPO) in respect of the husband’s company. This assumption was based on the evidence provided by the husband. The couple had both instructed an expert to value the husband’s shareholding. Although the experts did not agree on the value of the husband's shares, each expert had come to their respective valuations on the assumption that no IPO was likely in the near future. 

However, after the consent order was drawn up but before it was formally approved by the Court, the wife discovered that there was in fact an imminent prospect of an IPO. It was argued that the IPO could potentially increase the value placed on the company by hundreds of millions of pounds. Mrs Sharland immediately applied for the hearing of her financial claim to be reconsidered, on the basis that her agreement to the consent order had been obtained by fraudulent non-disclosure by the husband. Mr Sharland maintained that, both before and during evidence at the final hearing, no IPO was imminent. 

Mrs Sharland’s appeal to the Court of Appeal failed, but her appeal has been allowed by the Supreme Court. The Court of Appeal decided that, although they thought Mr Sharland had been dishonest in his disclosure, the agreement reached would have remained the same if he had provided full and frank disclosure. The Supreme Court held that, on the facts, the husband’s misrepresentation and non-disclosure was highly material to Mrs Sharland’s decision to settle. Not only did it affect the experts approach to the valuation but it also skewed the wife’s approach in assessing whether to agree to the financial deal. 

The Supreme Court has held that the case should now return to the Family Court for a further hearing. 

If you would like to discuss any issues about divorce and financial proceedings or any other issue surrounding relationship breakdown please contact:

Leanne Instrall

Solicitor, Family
Tel: 0161 836 8916

Inheritance Tax changes: Residence Nil Rate Band

Tuesday 13th October 2015

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Private Client Law Bulletin - Issue 94

Inheritance Tax (IHT) is currently charged on the value of the chargeable estate which exceeds the current Nil Rate Band allowance of £325,000. Although this Nil Rate Band is now set to stay at £325,000 until 2020/21, an additional Residence Nil Rate Band (RNRB) will be introduced from 6 April 2017 when a deceased’s interest in a ‘residence’ is passed on death to a ‘direct descendant’ and will be phased in as follows:

  • £100,000 for deaths in the tax year 2017/18
  • £125,000 for deaths in the tax year 2018/19
  • £150,000 for deaths in the tax year 2019/20
  • £175,000 for deaths in the tax year 2020/21
  • The RNRB will then increase in line with Consumer Price Index (CPI) from 2021/22 onwards.

‘Residence’ means a residential property which has been the deceased’s residence at some point and is included in his/her estate at death. If there is more than one such residence in the estate then Personal Representatives will be able to nominate which residential property should qualify. The value of the RNRB will be the lower of the net value of the deceased’s interest in the residence (i.e. after liabilities such as mortgage) and the maximum amount of the RNRB in the year of death, as above.

The residence must be left to one or more ‘direct descendant’, which has been confirmed as children (including step-children, adopted and foster children and children for whom the deceased was a guardian) and their lineal descendants. Also included are spouses and civil partners of lineal descendants or, in certain circumstances, widows/widowers or surviving civil partners of lineal descendants (if they have not remarried). Gifts in the Will to discretionary trusts (other than specific types of trust for bereaved minors and disabled persons or Immediate Post Death Interest (IPDI) trusts will not qualify as a gift to a ‘direct descendant’. However, currently, this does not affect the use of the s144 reading back provisions, so that transfers from a Will trust to ‘direct descendants’ within 2 years of death should still qualify.

Lifetime gifts of the residence to direct descendants will not qualify for the allowance, unless the deceased retained an interest (Gift with Reservation of Benefit) so that the residence is treated as still being part of the deceased’s estate at death for IHT purposes.

Any unused proportion of the RNRB will be available to be transferred to a surviving spouse or civil partner, if the first death is after 7 July 2015 and the second death is after 5 April 2017, in the same way as for the existing Nil Rate Band allowance. For deaths before 6 April 2017, the RNRB is deemed to be £100,000. It is possible to claim the unused RNRB of more than one pre-deceased spouse but it is not possible to claim more than an additional 100% of the RNRB at the prevailing rate.

Given that we know the RNRB will increase in the years from 2017/18 to 2020/21, depending on when the first spouse dies and the values involved, it may be worthwhile planning for the RNRB to be transferred to the surviving spouse, so that the joint estate will benefit from a double RNRB at the prevailing (higher) rate. Obviously, this would have to be considered alongside the tapering of the RNRB for larger estates, because using the RNRB on first death may help to keep the survivor’s estate below the threshold. 

Tapering of the RNRB for larger estates

There will be a tapering of the RNRB for estates over £2 million. The £2 million threshold is set for the years 2017/18 – 2020/21 but is set to rise in line with the CPI after that.

For estates over this threshold, the RNRB will be lost at a rate of £1 for every £2 over the threshold.  For example, a net estate of £2,350,000 in 2020/21 will not qualify for any RNRB allowance (assuming there is no allowance to carry forward). This tapering also applies in respect of calculating the transferable RNRB allowance so that, if the net estate of the first spouse to die was over £2 million, it will be necessary to calculate the reduced amount of the RNRB that is available to carry forward for the estate of the surviving spouse. Crucially, when calculating the ‘estate’ this includes assets that qualify for relief from IHT (e.g. Business Property Relief) but does not include gifts made in the seven years before death. This makes lifetime gifts more attractive as it may be possible to make sufficient gifts to take the value of the estate at death below the £2 million threshold, so that the RNRB will not be reduced. Clearly the assets given away should be those other than the residence.

To ensure that those people who sell their homes or ‘downsize’ to pay for long term care are not disadvantaged, HMRC have confirmed that the RNRB will also be available when a person ceases to own their home after 8 July 2015 and assets of an equivalent value and/or a lower value residence, up to the value of the RNRB, are still owned in the estate and passed on death to direct descendants. The amount of the RNRB available cannot be more than the RNRB that would have been available had the downsizing not happened. HMRC have recently published a technical note outlining the proposals for this and are asking for comments but the draft legislation has not yet been published. 

This is a targeted measure, in line with the Conservative promise to increase the Nil Rate Band and allow people to pass on their ‘home’ to the next generation. Consequently, the legislation is complex and existing structures in Wills should to be reviewed, to ensure that the available allowances are utilised and to take advantage of any particular IHT planning points.

If you would like more information about these changes or to discuss how we can help you with estate planning or any other private client law matter please contact:

Emma Agamian
Tel: 0161 836 8934