HMRC’s Trusts and Estates team met with the Agents Advisory Group and Capital Taxes Liaison Group in May and provided the following updates:
Despite the unique challenges presented by the current COVID-19 situation, inheritance tax and trusts operational areas are currently meeting all key targets and processing post and new accounts within published turnaround times.
A new webchat service was launched in May, which can be used to obtain help when completing the IHT400 forms and schedules, and to answer other inheritance tax and probate questions.
HMRC confirmed that IHT421 forms can now be emailed directly from HMRC to HM Courts and Tribunals Service. HMRC is unable to email customers due to security protocols in place, but will either reply in writing, or add a note to the calculations.
There have been periods when the Trusts Helpline call response times have increased. If you are experiencing problems getting through, you can email HMRC at firstname.lastname@example.org.
Digital signatures for IHT205
HMRC confirms that the digital signature process now applies to IHT205 forms, as well at IHT400 and IHT100 forms, until further notice. It will accept IHT205 forms that are not physically signed from professional agents, if:
the names and personal details of the legal personal representatives are shown on the declaration page;
the account has been seen by all the legal personal representatives, and they all agree to be bound by the declaration;
the agent includes the following statement: ‘As the agent acting on behalf, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Return have both seen the Inheritance Tax Return and agreed to be bound by the declaration on page 8 of the form IHT205.’
The GOV.UK website has been updated to reflect these changes.
Electronic submission of IHT form update
HMRC is offering Dropbox as a temporary measure to support agents when it is not possible or practical to submit IHT400 and IHT100 accounts by post during the COVID-19 disruption.
HMRC retains full ownership of all information/data that it places in Dropbox and all information/data that an agent submits there. Only the HMRC Dropbox account holder and the HMRC security audit team can access the information.
Time limits and penalties for late filing and payment
HMRC has updated the guidance on reasonable excuse to include occasions where customers have not been able to file their accounts on time due to the impact of COVID-19.
Claim time limits for IHT reliefs
HMRC has enquired about deadlines for IHT relief claims that may be impacted by the present disruption customers are facing. The three areas which have been raised are the time limits for: relief on property sales, relief on sale of shares and instruments of variation. HMRC is continuing to monitor the position.
STEP will continue to monitor the developments and update members accordingly.
When writing this blog, usually the first thing I do is to refer to my previous one I posted to comment or update England and Wales members on items mentioned. Not this time.
The worldwide COVID-19 pandemic has affected everyone, whether they have contracted the virus or not. It is in such circumstances that the benefits of being a member of a supportive organisation really come into their own.
Mark Walley and the team at STEP Head Office are to be congratulated on keeping things on an even keel throughout this period of immense upheaval. While managing the logistics of moving to home working, the staff have pulled together resources to help members keep fully updated, starting with the COVID-19 Technical Hub on the STEP website. After that there are any number of links to new information, from holding virtual meetings; changes to examinations; rescheduled conferences; maintaining CPD and just about any other subject of relevance. The Communications team has excelled itself in managing the STEP online offering to best support the membership.
Life goes on and in other non-COVID news, The All Party Parliamentary Group for Inheritance Tax and Intergenerational Fairness was launched on 28 January to positive media coverage. STEP’s involvement with this initiative has served to enhance our reputation and strengthened stakeholder relationships in this vital area.
The Legal Services Board is currently reviewing how to ensure that legal professionals remain competent throughout their careers. The call for evidence deadline has been extended to 26 June, and STEP will be making a submission to that review.
HMRC is keen to raise standards in the tax advice market and has called for evidence to support the UK Government’s crackdown on promoters of tax avoidance schemes. It is also conducting a review to give taxpayers assurance that advice received from professionals is reliable. Again STEP will be giving a response.
As we emerge from the unusual circumstances in which we find ourselves it will be interesting to see which parts of our lives revert to existence pre-COVID. By the time of my next blog in December, I hope we will have had the England and Wales Branch Chairs Assembly – maybe via video conference. I look forward to hearing your own experiences and sharing some new, and quite probably unforeseen, best practice.
On 3 June, STEP joined a webinar hosted by Anti-Money Laundering Europe (AME) on the future of the European Union’s fight against money laundering.
John Riches TEP, Chair of STEP’s Public Policy Committee, was joined on the panel by Jérôme Deslandes, Cabinet of the Executive Vice President of the European Commission; and Piers Haben, Director for Banking Markets, Innovation and Consumers at the European Banking Authority (EBA). The chair was Mike Savarese, AME.
The webinar discussed the European Commission’s package on anti-money laundering (AML) published on 7 May.
Its main item was an action plan, accompanied by a list of high-risk third countries, and a methodology describing how these were chosen. The action plan aimed to address the weaknesses identified in research from 2019 and was based on the following six pillars:
Better implementation of rules – This will be achieved by a number of tools particularly interconnection of beneficial ownership registers, more powers for the EBA and a focus on country-specific recommendations. The eventual aim is for an EU supervisory body responsible for conducting on-site examination on the effectiveness of the AML framework.
Harmonised rulebook – This will be achieved by sharing information, integrating the latest Financial Action Task Force (FATF) standards and building on the good examples of member states.
EU level supervision – This integrated AML system will need to be jointly run by the EU and national authorities.
Coordination and support mechanisms for FIUs (Financial Intelligence Units) –Through common templates and tools, standards on feedback, support of joint analysis and training.
Law enforcement and information sharing – New tools such as criminalisation of money laundering, a Directive on the use of financial information and rules on asset recovery (including mutual recognition of freezing orders) will be used.
EU’s global role – This will be achieved through the new methodology and the list of high-risk third party jurisdictions that pose a threat to the EU’s financial system.
John Riches’ view on these developments from a private sector perspective, was that due to the rapid development of the EU’s AML framework, member states appear to have struggled to implement past incarnations of AML. He observed that there seemed to be an inconsistency in approach between states, resulting from a lack of clarity and practical guidance.
His main concerns were over beneficial ownership registers and transparency, and how this lack of clarity had made implementation of trust registers difficult, and also potentially unfair. He noted that the uncertainty over some of the provisions in the Fifth Anti-Money Laundering Directive showed a lack of understanding on how trusts work. He also voiced major concerns over the potential conflict of public registers versus privacy rights.
The panel heard that the EU is aiming to be assessed as a single jurisdiction, with a single supervisor and rule book, within five years, so will be recognised as such by FATF. This single approach is seen as being cheaper and more efficient, and a more effective way of achieving a stronger, more unified and robust system.
The event ended with John Riches stressing that the EC consultation should be much more than a box-ticking exercise, and something more meaningful, which will benefit everyone.
The event attracted a number of delegates from 18 different jurisdictions, and discussed a range of issues for philanthropy advisors. It was ably hosted by George King IV, Partner, MASECO Private Wealth; with Jo Bateson TEP, Partner, KPMG; Cath Dovey, Co-founder, Beacon Collaborative; and Alana Petraske, Partner, Withers Worldwide LLP, on the panel.
The current COVID-19 crisis and the deep and radical changes in society it has brought has prompted an increase in people wishing to give, and brought about a more important role for the philanthropy advisor. This means it is essential for advisors to have the right tools in place, and to be aware of clients’ shift in attitudes towards philanthropic giving, and what it involves.
Advisors need to feel comfortable about providing advice, especially while getting used to new ways of working. While much work can be done online, there are still concerns over physical actions, like signing cheques for clients, although on a positive note, many regulators have taken a pragmatic approach, recognising the need to work remotely.
A number of reasons were given for the increase in charitable giving. Clients want to be seen to be doing something, or they are using the increased ‘spare time’ to reflect on their place in society and how they could better themselves, with charitable giving being a solution. Many are acting in response to the current situation with a sense of urgency, and want to donate as quickly as possible.
During the first two weeks of the crisis, established infrastructure funds were able to utilise pre-existing networks and donate immediately and strategically. Subsequently there was a broader response, with non-regular clients and new donors emerging. Many of these had used the first few weeks to get their own affairs in order, and then wanted to act with speed. Anecdotal evidence showed that donors range from those with structures in place, to those who need preliminary hand-holding.
Even though the crisis is a generation-defining moment and clients want to donate quickly, several on the panel urged advisors to recommend clients should hold fire, and instead research their charities of interest, with a view to deploying their wealth strategically over a longer period (6 -12 months). It’s vital to manage clients’ anxiety and also assess the risk factors, as charities will be in distress for some time, and many will not survive at all. Reports show that in the UK, 40-70 per cent of charities may be dissolved in the next 12 months.
Another key, and indeed quite obvious issue is whether the client has sufficient money to give. The outbreak has brought out basic level survival instincts (such as the run on loo paper) and if someone feels under attack from the virus, they may not want to give, or feel they can’t.
The panel also suggested advisors be mindful of their own businesses, and review what they expect to happen in the next 6 months – 2 years. Points to consider include: where their work comes from, what will future working will look like, and what clients will be seeking from them. However, now is the perfect moment for advisors to be the philanthropy champion at work and integrate philanthropy into wealth planning.
The event ended with the panel highlighting what they felt were the key skills required for advisors in the industry:
Collaboration and the importance of building up a community which you can utilise and engage with.
Honesty regarding your skills, and being prepared to practice and train those who need further improvement.
To focus on a useful knowledge base, such as understanding what grant makers and other key players are doing.
Update 25 August 2020: HM Courts & Tribunal Service (HMCTS) has provided some further guidance in relation to submitting England and Wales probate applications in the correct format:
If you have lodged an application through the online portal using your registered account you do not need to send any application forms, when you send in the will and other supporting documents. If you send either of the application forms, PA1P or PA1A, this will delay your application. Please only send in the supporting documents requested on the summary page.
Form PA13 is only for use by personal applicants and not to be used by legal professionals. Please lodge the usual lost will affidavit and supporting exhibits. Changes are being made to GOV.UK and form PA13 to show only for use by personal applicants. Using form PA13 will delay your application if you have not provided an affidavit.
Update 11 June 2020: HMCTS has published the attached FAQ document (pdf) for professional users of the Probate Service to support professionals with online applications. HMCRS has confirmed that this is a working document which it intends to continually update as the process continues to evolve.
If you have any feedback on the FAQs please send your comments to email@example.com.
Update 1 May 2020: HMCTS met with STEP, the Law Society, SFE and ICAEW this week for its regular Probate Service meeting. The following updates were provided:
The combined form is timetabled for approximately two weeks’ time and a formal notification will be provided.
Partners who are Executors are now able to make online applications.
Trust corporations and others which are currently unable to apply online will be added to the process over the next couple of months.
HMRC intends to start sending IHT421 forms directly to the Probate Registry within 15 days of issue. A formal notification will follow when this has been implemented.
We have requested an additional meeting in the next ten days to discuss specific form issues with HMCTS and the Probate Registrar. Please contact us at firstname.lastname@example.org if you have issues that you would like to be reported.
HMCTS has also enquired whether firms are struggling to get the original wills to the Probate Registry during remote working. Please do let us know if this is the case.
Original blog: HMCTS has announced some interim operational arrangements that it will be making in light of the COVID-19 restrictions. The key changes will relate to the following areas:
acceptance of statements of truth in place of affidavits,
guidance on the signing/witnessing of renunciations and powers of attorney,
Statutory Instrument 2020 No 33: TheAdministration of Estates Act 1925(Fixed Net Sum) Order,
probate practitioner forms and electronic signatures.
Acceptance of statements of truth in place of affidavits
Statements of truth can be accepted in place of affidavits in the following circumstances:
identity of executor,
misrecital of date of will in codicil (if rectification not required under S20 Administration of Justice Act 1982),
Rule 41 – amendment of grant,
Rule 41 – revocation of grant,
Rules 30(1) (a),(b) and (c),
Rule 13 (knowledge of content of will),
Rule 14 (alterations in will),
Rule 15 (attempted revocation of will).
HMCTS is awaiting further advice in relation to the acceptance of statements of truth for use in applications that specify evidence must be submitted by affidavit.
Guidance on the signing/witnessing of renunciations and powers of attorney
Documents including renunciations and powers of attorney that are required to be signed as a deed before a disinterested witness may be effected in the usual way using any method of signing/witnessing that can be achieved under the safe distancing measures currently specified by the government. HMCTS will not look beyond any document that is submitted that is signed and witnessed in the usual way, including the use of electronic signatures.
Statutory Instrument 2020 No 33: TheAdministration of Estates Act 1925(Fixed Net Sum) Order
With effect from 6 February 2020 the fixed net sum for spouses and civil partners of persons who have died after that date without leaving a will has been increased to GBP270,000. If you have been issued with a grant of Letters of Administration since 6 February 2020 and you believe the entitlement to the estate may have been affected by this, you are advised not to administer the estate and, if you are a personal applicant, to seek legal advice.
Probate practitioner forms and electronic signatures
HMCTS has received queries from practitioners in respect of whether the new forms are for use by practitioners and personal applicants. These forms will become a combined form for use by both at the end of the transitional period and will be uploaded as a combined form on the gov.uk website.
For clarity, the links to all the relevant paper forms for probate professional practitioners only to use are:
Please note: All forms for practitioner use contain the following statement in the title for probate professional practitioners only. If this statement is not included, the application is only for the use of personal applicants at this stage.
‘HMCTS advises that any new work which is undertaken should now be completed by either using the new paper application forms (electronic signatures including typed signatures will be accepted) or you could alternatively apply online. HMCTS is actively encouraging the use of online applications as this enables us to maintain the service whilst many of our staff are also remote working.’
This week we publish a short report reflecting on the use of PCRT (Professional Conduct in Relation to Taxation) by the professional bodies since the Standards for Tax Planning were added in March 2017.
STEP became a signatory to PCRT in 2011 following its inception 25 years ago by the other UK tax bodies. PCRT is reviewed annually and updated by representatives of each of the seven bodies (along with STEP, these are AAT, ACCA, ATT, CIOT, ICAEW and ICAS).
In its present form, PCRT sets outs the Fundamental Principles and Standards for Tax Planning behaviours required by all our full, associate, affiliate and student members when they are advising on UK tax (regardless of the jurisdiction in which they may be based).
While 2017 saw the Standards introduced, the version issued on 1 March 2019 was the first major restructuring in 25 years to take account of feedback from our members. The updated help sheets provide guidance on how members can apply PCRT to their day to day professional activities, exercise their professional judgement and resist any undue pressure they may receive from clients or employers to act in an unethical manner. The help sheets focus on
submission of tax information and tax filings,
dealing with errors,
request for data by HMRC,
members personal tax affairs.
Application of PCRT
STEP’s Code of Professional Conduct sets out our core standards, and PCRT supplements this. It does not stand in isolation, and any member who is found to be in breach of PCRT will likely have breached our core Code, other membership requirements, plus any regulatory requirements that members may have to abide by.
PCRT does not only affect members in professional practice. Its Fundamental Principles and Standards of Tax Planning apply to all members who practise in tax, including employees attending to the tax affairs of an employer or client, those dealing with their own tax or that of their family, friends, charities, etc, whether or not for payment, and those working in HMRC or other public sector bodies or government departments.
Tax agents who are not members of any of the signatory bodies are not ‘off the hook’ either. All agents, including those with no professional qualifications at all, are covered by HMRC’s own Standards for Tax Agents published on 4 January 2018, which incorporates the principles of PCRT.
The eagle-eyed among you will have noticed HMRC’s current call for evidence on ‘Raising standards in the tax advice market’. STEP will be responding to this call for evidence by its closing date of 28 May 2020.
How do members use PCRT?
At its simplest level, PCRT is intended to guide and assist members, enabling them to ensure that they undertake work effectively and appropriately. In practice it is being used as a reference point for professional standards, helping members make informed choices.
PCRT helps members demonstrate the required standards to clients and employers, and assist with explaining why some planning arrangements are not suitable and cannot be undertaken, helping members to support their colleagues and fellow professionals in making correct decisions, and showing a commitment to ethical practice.
As professionals, members serve their clients’ interests, but also uphold the reputation of the tax profession, and the reputation of STEP as a society, all of which take account of the wider public interest. PCRT is a powerful tool in helping us retain public confidence in the work of members.
In these various ways, PCRT appears to be working successfully in supporting members, their clients and the wider community by describing the standards of behaviour that clients can expect when seeking advice on their tax affairs.
How do the professional bodies use PCRT?
PCRT has been widely promoted and debated by the professional bodies across our member communications, and its Fundamental Principles and Standards for Tax Planning play an essential role in promoting ethical conduct among our members.
STEP, along with each of the professional bodies, has entered into a memorandum of understanding with HMRC, allowing HMRC to report to us any alleged misconduct by any of our members. Where such a report is received, we will use the PCRT Fundamental Principles and Standards of Tax Planning to assess whether an appropriate professional approach has been adopted to determine whether we need to commence an investigation under our own Disciplinary Rules.
Finally, HMRC’s report, ‘Measuring tax gaps 2019’ shows a significant reduction in the tax gap attributable to tax avoidance. While there is no direct evidence, each body is of the firm belief that the changes to PCRT have helped to support this reduction. Any questions should be sent to Sarah Manuel, STEP’s Professional Standards Manager at email@example.com.
Following a query raised on the Trusts Discussion Forum, STEP’s UK Technical Committee has been considering the capital gains tax consequences of a deed of variation of a will in circumstances where the asset which is the subject of the variation has already been disposed of by the original beneficiary.
The specific issue raised was whether the original beneficiary should be taxed on the disposal of the asset or whether the capital gains tax deeming provisions relating to deeds of variation have the effect that the donee under the deed of variation should be treated as having disposed of the asset.
Part of the uncertainty had been caused by the apparent inconsistency of two paragraphs in HMRC’s Capital Gains Tax Manual: CG31600 and CG31630.
The committee has been in correspondence with HMRC in order to clarify this point. HMRC has confirmed that:
It is possible to have a valid deed of variation in relation to an asset which has already been disposed of by the original beneficiary.
The effect of the deeming in s.62(6) TCGA is that the donee under the deed of variation is treated as having acquired the asset from the personal representatives and must therefore also be deemed to be the person who disposed of the asset.
If the original beneficiary and/or the donee have already filed tax returns for the relevant tax year they will be able to amend their tax returns and/or make a claim for relief from overpaid tax.
HMRC has amended paragraph CG31600 of itsCGT Manualto reflect its view.
Robin Vos TEP, Chair of STEP’s UK Technical Committee.
Entries are open for the STEP Private Client Awards 2020/21 from 3 February until the new date of 26 June. The Awards are widely acknowledged as being the premier event in the private client industry calendar. Winning an Award is a very clear and recognised hallmark of excellence.
How then, do you go about winning an Award? Mary Duke, TEP, Chair of the Presiding Judges, gives us her top tips based on her personal experience as a nominee, winner, judge and now as Chair of the Judging Panel.
You have to be in it to win it
There can sometimes be a perception that the Awards are only for larger firms or for the usual London suspects. However, the judges have clear instructions to make allowance for smaller entrants and to take cultural differences into account when considering international entries. Last year’s entrants and winners were the most international yet. Entries from all sizes and types of firm are therefore welcome. Strong entries will always attract attention from the judges, regardless of their size or regional origins.
Enter the right category
It is a constant surprise to the judges how many firms enter the wrong category. One submission even began with the bold statement: ‘We are a leading [another category entirely] firm…’. Read the category criteria carefully, and if you think the judges might have difficulty understanding why you are applying for a particular category, help them by explaining your business better.
Put yourself in the mind of the judges
My number-one tip, when writing your submission, is to imagine yourself as one of the judges.
Be aware that most of the judges will not know most of the applicants. If they do, then all the better – judges are encouraged to bring their personal knowledge to the process – but for the most part, judges will be relying heavily on the submission. So even if you think you are the best-known firm in the world, make your submission count.
Understand the judging process
There are three phases to the judging process.
The Shortlist Phase – First, submissions for the legal categories often receive a high number of entrants resulting in the category being split into large and mid-size firm groups. This is why entrants in these categories are asked to submit the number of fee earners in their team and in the firm. The definition of fee earners can be viewed on the FAQs page of the website. Then the categories are assigned to judging groups and each judge will have to review up to 100 submissions, each of up to 1,100 words. Judges have to submit a scorecard against the category’s criteria and write a narrative (minimum 50 words) to support their outcome for each entrant. That is 220,000 words of reading, 1,000 scores to give out, and at least 10,000 words to write. It is an incredible amount of work.
The Panel of Experts – After the shortlist is announced, the entrants for each category are submitted to a panel of experts. These individuals are chosen for their ability to provide independent and knowledgeable insights into the entrants and the field of their work. (But they are not direct competitors in the category.) A list of the panel of experts is available on the awards site. The reports of the Panel of Experts are considered as recommendations only and do not constitute a formal vote.
The finalist stage – The finalists’ entries and the panel of experts’ recommendations are provided to the full panel of judges for this critical decision phase. Prior to meeting for final deliberations, each judge is required to submit their own report on each individual submission indicating which entrant they believe should win the category. The judges then meet to deliberate and make a final decision for each award.
This is a thoughtful and transparent process involving a good deal of debate and discussion. At times, the discussion results in judges shifting their views. There is no consideration of how many tables a firm might purchase at the awards dinner or the size of the contribution an entrant may have made to the officially supported charity. In fact, there is no way for the judges to know these things based on the timing of the decision process. Likewise, there is no consideration given to whether a firm won in the preceding year. Judges with conflicts or whose firm has entered a submission are recused from related categories.
Answer the questions
It is the first rule of exam-technique we should all have learned at school, but every year I am amazed at submissions that fail to answer the question. There are five criteria for each award. Each of the criteria is weighted equally and we score each on a scale of one to five. So answer each of the questions individually. Don’t allocate too much space to one category to the disadvantage of another.
Further, make sure that you clearly answer each of the criteria in turn. Don’t use jargon or abbreviations that are not in common usage. Remember, the panel of judges is made up of a diverse group of practitioners from differing fields of expertise.
The most important thing to avoid is a long single narrative. Even if it addresses all the criteria, judges aren’t going to thank you for having to read it several times in order to extract and mark each one. Make the judges’ lives easier and they are likely to mark you more highly.
Don’t waste word-count
You have 1,100 words. Make them all count. So many submissions waste words. Précis rigorously. Then do so again.
Clear, succinct language is appreciated.
Avoid the marketing spiel!
You will be judged by fellow senior industry professionals who can spot puffery and hyperbole from a long way off.
Most of the work in our industry is advisory. The ability to communicate clearly with clients is crucial to this. So, demonstrate your ability to give clear advice, with a clear and well-written submission. If your marketing team is superb, then by all means use them. The judges’ experience, though, is that submissions written by those at the coal-face often read more convincingly.
Pay attention to spelling and grammar and beware unnecessary adverbs and superlatives.
Big numbers (and names) are irrelevant
Many submissions make great play of the financial value of their clients or cases. Others seek reflected glory in acting for big names. Yet both of these have almost no effect on the judges. Tell us what makes your case unusual, complex or novel. Don’t simply name-drop celebrity connections.
Provide evidence; don’t merely assert
Most criteria ask you to ‘demonstrate’ or ‘provide evidence’. Yet many submissions assert things – ‘We are the leading firm providing a superlative level of client-service and exceptional satisfaction’ – without any evidence to back this up.
What will go down well is an evidence-based entry that gives clear examples of what the firm has done over the past year to make it stand out from the crowd.
Entries should be particularly careful about unguarded assertions. ‘We are the only firm that can…’ or ‘We are the largest firm which…’ are particularly dangerous assertions – especially where some of the judges might work for a competitor and dispute whether this is true.
Tell us something unusual
A good answer for each of the criteria might get you shortlisted. But if you want to win, you will need to stand out.
Tell the judges something different, something unusual, something genuinely innovative. Think forward to the awards ceremony and the announcement of the winner. When the celebrity-host says: ‘The judges were particularly impressed by…’, what one facet of your submission will the judges have chosen?
The judges are both curious and cynical in equal measure. They will check what you say in your submission against what you say on your website and other sources of information. Glaring inconsistencies tend to result in entries receiving short shrift.
Remember the Awards are ‘ … of the Year’
Your firm will obviously be very good at what it does, but the Awards are intended to highlight those that have achieved particular success over the past year. Make sure you are rigorous in only referring to evidence from 1 May 2019 to 30 April 2020. General statements about historic successes will waste words and not score any marks.
….and finally, good luck!
The judges look forward to having a bigger job this year, with many well-written submissions to choose from!
Mary Duke, TEP, is an independent advisor to families.
The UK government laid a statutory instrument on 15 January 2020, which increases the net sum that a surviving spouse or civil partner is entitled to receive in England and Wales where a person dies intestate leaving issue (children).
The new legacy has been increased from GBP250,000 to GBP270,000, and will come into force on 6 February. The formal title is the Administration of Estates Act 1925 (Fixed Net Sum) Order 2020.
Under the rules of intestacy, if there are no children, then the spouse or civil partner will inherit the whole estate. However, if there are children, then the spouse or civil partner will be entitled to all of the deceased’s personal property, the first GBP270,000 of the estate and 50 per cent of the remainder, leaving 50 per cent to be divided equally between the children.
How was the calculation made?
The government reviews the amount of the statutory legacy every five years and increases it in line with the Consumer Price Index.
When calculating the increase, the Lord Chancellor followed the standard methodology in Schedule 1A to the 1925 Act (following the amendments brought in by the Inheritance and Trustees’ Powers Act 2014). This involved calculating and then applying the change in the Consumer Price Index (CPI) from the ‘base month’ (October 2014) to the ‘current month’ – the most recent CPI figure available at the time of fixing the sum (November 2019, published by the Office for National Statistics on 18 December 2019). This equated to an increase of 8.1 per cent of the GBP250,000 sum, with the figure then rounded to the nearest thousand (as required by the Act), which resulted in the increase of GBP20,000.
STEP welcomes the increase to the fixed legacy, although we would caution that it is prudent not to rely on the rules of intestacy, and to make and review a will regularly.
I’ve learned much in my first year as Chair of STEP England and Wales. The most impressive thing I’ve seen remains something that I already knew existed; the passion and dedication of our members.
The E&W Committee are looking at how we can increase support at a local level. Getting new members involved remains the lifeblood of the Society. Those attending STEP’s global Branch Chairs’ Assembly recently will have heard the inspirational Tiger de Souza, Director of Volunteering at The National Trust, giving us an insight into increasing volunteer participation. I’m sure many will be implementing the lessons we learned from him.
2019 has been another year of significant policy developments. The planned increase in probate fees didn’t happen. This was due, in large part, to work done by STEP’s policy and communications teams and E&W former Chair Rita Bhargava TEP, whose persuasive arguments convinced the government to think again.
Many of our UK Practice Committee members’ terms are coming to an end shortly. We’re delighted that they have joined the new UK Advisory Group, which will replace the current committee. This will allow E&W to retain access to their collective knowledge, experience and capability for drafting the articles, practice notes and briefings that many of us have referenced over the years.
The UK Technical Committee, has continued to keep pace with changes to tax and legislation proposed by the government. Led by Robin Vos TEP, this committee has responded to a number of consultations on behalf of STEP. We’re lucky to have them overseeing the interests of our members and the public at large.
E&W Committee has been looking at embedding our standards for tax planning into our everyday practice. STEP’s Professional Standards committee are developing a toolkit that will enable you to demonstrate your compliance with these high standards. The first annual report, Professional Conduct in Relation to Tax, has been drafted and will be published imminently.
In September, Professor Stephen Mayson published his interim report regarding the review of legal services regulation in England and Wales. STEP has considered the proposals and Amanda Simmonds TEP and Rita Bhargava will be responding to the consultation on our behalf.
It’s been a good year for STEP, with 2020 shaping up with more exciting things to come. My thanks to Mark Walley and the STEP staff for all their hard work, as well as to the members of the E&W Committee. Most of all, thanks to all the Society’s members and volunteers throughout E&W, without whom there would be no STEP. I look forward to meeting as many of you as I can throughout 2020.