20 minute read
Legal
from SBT issue 459
To be, or not to be…
Fiona Dodd, a partner at Mayo Wynne Baxter, explains the potentially serious implications faced by couples who don’t marry and don’t have wills.
“To be, or not to be…married? That is the question.” Shakespeare was a little more eloquent but, if he’d been around on Valentine’s Day, he may have overheard one or two proposals, and read more than a few cards proclaiming his poetry. Shakespeare and his mastery of the English language have survived 400 or more years, but some things haven’t, even if we think they have. For example, many people still believe that the idea of a common law husband or wife exists. It doesn’t. The only way to guarantee you have the rights of married couples is to get married or have a civil partnership. It may not be romantic, but it can have very significant consequences. I have been writing wills for a few more years than I care to remember now, and I know that I have been responsible for
several weddings, including one for a lovely couple who had been together Legal for over 20 years, and were very happy as they were, until they realised the tax consequences. They went to the town hall, got their certificate, hid it somewhere safe, and as far as I know are still living happily ever after. Mrs W, who I heard about on the news a while ago, had been living with Mr M for 18 years before his sudden death. They
owned a house together, and probably thought of themselves as an “old married couple”. However, they weren’t. Mr M had separated from, but never divorced, his wife. Nor did he have an up to date will. When he died, his share of the home that he bought with Mrs W passed not to her, but to his wife.
Nearly four years after her partner’s death, and following a long, and expensive court case (with costs of over £100,000 being mentioned), Mrs W finally secured the right to inherit her partner’s share of their joint home. But Mrs M has the right to appeal, so the ordeal didn’t end there.
Even if the appeal does not proceed, the emotional costs of this case are enormous for all concerned, and the sadness is that it could all have been avoided for a relatively small sum if he had written a will.
The law does not provide unmarried couples with the same protection as married couples, even if, as in this case, Mr M lived for many years with his unmarried partner, instead of his wife. His wife had an automatic inheritance, his partner did not.
Divorce is expensive, both emotionally and financially. Many couples decide to bypass the lawyers where possible and opt for DIY. However, if there isn’t a court order in place dividing the finances, an ex-spouse can make a claim for a share of the estate. I dealt with a very sad situation a few years ago when Mr K, who was twice divorced and had two children died before the second financial order was made. There were four sets of lawyers and eventually his assets, after a long battle, were finally divided between all four parties. Lawyers would rather people don’t get into difficulty in the first place, and it’s no victory to see so much spent in fees when a Will could have helped them all.
Marriage is often the happy joining of two families. But that’s not always the case, and I see many parents wanting advice on how to protect what they see as their family’s inheritance from their children’s chosen spouse. A will can be part of that protection, or the use of family trusts, or even simply talking to your children about pre-nups before marriage. We can help clients think through their priorities and structure their arrangements to suit their aims. Often the question is not what are you protecting, but why? And from whom?
That protection may extend not just to personal assets, but business owners need to be sure that they have put measures in place to ensure that their business can continue, and that they haven’t inadvertently caused a tax problem by making the wrong arrangements! We can advise and discuss the best options to ensure that a client’s happiest day ever really isn’t the start of a list of legally avoidable problems!
Whether or not a person chooses to marry, or to divorce, or to live together is an entirely private matter. However, it should be an informed decision, bearing in mind all the known legal implications. Shakespeare also said in the Merchant of Venice: “One half of me is yours, the other half yours. Mine own, I would say; but if mine, then yours, and so all yours.” If that’s what you want to happen, then make sure you have the everything in place to achieve this, instead of “Love’s Labour’s Lost”.
Fiona Dodd
fdodd@mayowynnebaxter.co.uk www.mayowynnebaxter.co.uk 0800 84 94 101
365 Employment Law explains how legal protections and cultural shifts have evolved over the past two decades.
As an employment law specialist for over
Legal 20 years, the issue of equality and diversity in the workplace has evolved over time - in terms of both the legal protections afforded to workers and the cultural shift in attitudes to workplace equality. Whilst those cultural attitudes have evolved, for those workers who are on the receiving end of discriminatory acts it is often harder than ever, in practical terms, to enforce the rights they have.
Discrimination and the law
The rights that workers have in respect of non-discrimination are under The Equality Act 2010. This piece of legislation, when brought into law, largely combined the various nondiscrimination rights under legislation such as the Sex Discrimination Act, Race Relations Act, and Disability Discrimination Act into one piece of legislation. Whilst it updated some interpretations of rights, based on case law, it was largely aimed at harmonising the various rights that had been brought in over the previous 10 or so years. Other than the three original rights (sex, race and disability), prior to the early 2000’s, there was no discrimination protection in place, for example, on grounds of sexual orientation or age. This was remedied by multiple regulations in that period and harmonised under the Equality Act. The Equality Act provides protection from discrimination for workers, employees and, in some cases the self-employed, on grounds of nine “Protected Characteristics”, namely sex, race, disability, age, religion and belief, sexual orientation, gender reassignment, marriage/civil partnership and pregnancy/maternity.
For obvious reasons, some of those protected characteristics apply to all, and some to qualifying workers i.e. disability, maternity, but the simple position is that workers are protected from discrimination on grounds of those protected characteristics. That discrimination applies to both direct discrimination, which cannot be justified in law (other than for age), and indirect discrimination, which can only be objectively justified as a defence. The rights relating to disability also have a duty, on the employer, to make “reasonable adjustments”, and in respect of maternity rights, these overlap with sex discrimination rights, particularly in respect of flexible working.
Practical considerations
I often deal with employers who have had employment tribunal claims brought against them for alleged acts of discrimination. This is from both the perspective of defending those claims and bringing them for workers. Whilst some acts of discrimination are aggressive and obvious, many are not, and some of the examples that I see are easily avoidable. I have specifically seen the following examples come up regularly:
1) “But we have all of the policies in place”
Employers often obsess over policies,
particularly relating to non-discrimination. They spend a lot of time putting them in place, and often train staff on them. This is where the problems start for them, because they then do not consider actual discrimination in the workplace, the triggers for it, and when it has taken hold. I have often seen examples where despite obvious evidence of workplace discrimination, the employer refuses to accept it can be occurring, because they have the policies in place that indicate it is not tolerated. It is good practice for employers to bring in someone external, even on an annual basis, to road test their policies through some practical examples.
2) “We have followed the flexible working policy”
Subject to qualifying criteria, employees have the right to request flexible working through a process set out in law. That process is only the right to request flexible working, not have it granted. Employers often, as a result of that, have a silo mentality about a flexible working request. If an employee requests flexible working, through the process or otherwise, and the reason for that request is for a protected characteristic, the employer needs to engage with the reality of that request, and not rely on the process as being one of request only. I have seen lots of examples where employers refuse a flexible working request, because the process lets them - without understanding that any such refusal could be discriminatory. This is particularly prevalent over the issue of employees returning to work parttime after maternity leave, or in respect of reasonable adjustments as a result of disability. I recently represented an employee who had made a flexible working request, which had been refused under the policy, that by its refusal was a failure to make reasonable adjustments due to that employee’s disability, and therefore discriminatory. Even up to the final hearing, the employer could not understand how the discrimination had arisen, when they had complied with the flexible working request process.
3) “We treat everyone the same”
The whole purpose of discrimination legislation is to even the playing field. I see a number of employers who have a starting position of treating everyone the same, which then causes indirect discrimination e.g. “we don’t have flexible working and everyone is treated equally”, or “we don’t need to maintain the lift to the third floor, and everyone is expected to take the stairs”. This type of positioning is classic indirect discrimination i.e. on the face of it, everyone is equal but, in practice, it affects one minority group on grounds of their protected characteristic. In law, indirect discrimination can of course be objectively justified, but employers need to think about that in advance.
Enforcement issues
Whilst the position in law is one of protection for employees, and a means of resolution for both employer and employees, the practical reality is more complicated. The Court and Tribunal system has been brought to its knees by a decade of cuts, and it can be up to a year before even basic employment rights come before an Employment Tribunal. This is not ideal for either employees or employers, as the issue hangs over them for an extended period. With that in mind, parties can often engage in practical and constructive settlement discussions, but if that is not possible, the issue is often there for extended periods.
Modern working
The issue of modern working practices, including remote working, was not necessarily envisaged at the time the Equality Act came into force. A specific update of the law as regards nondiscrimination is needed as, without it, Employment Tribunals will interpret obligations differently, and conflicting legal authorities will arise. Chaos also awaits in December 2023, when the Government’s legislation to remove all retained EU law from UK law happens. This could cause real problems for employers, as certain EU regulations eg relating to part-time workers, and holiday rights could cease to be law in the UK. This could lead to a two-tier workforce (most will have existing contractual rights), and lots of litigation about staff not offered basic rights that others already have. At this stage, it is a case of waiting to see what will be retained!
The simple position is that employers who consider discrimination issues in advance, and how they work in practice, will always be better placed than those who don’t!
Please always take advice on any staff related issues.
Alex Jones
By Alex Jones, Managing Director 365 Employment Law www.365employmentlaw.co.uk
thetimes.co.uk
A risky budget strategy?
In his first Budget speech as Chancellor, Kwasi Kwarteng said that “we need a new approach for a new era, focused on growth”.
Mr Kwarteng said he would build this ‘new approach’ around three priorities: reforming the supply side of the economy, maintaining a responsible approach to public finances, and cutting taxes to boost growth. What followed certainly delivered on the third of these: this package has been described as the biggest tax cutting budget for half a century, following on from the earlier announcement of very substantial support for individuals and businesses coping with rising energy prices. The Chancellor also put forward a number of proposals to reduce costs and regulation for businesses, moving the levers of tax and legislation to encourage investment, employment and economic growth. It remains to be seen whether the UK’s productivity and national income will respond in line with his aspirational target of 2.5% a year.
Finance
The other priority, fiscal responsibility, was covered in less depth. The response of the financial markets to the announcement of such substantial tax cuts was immediate: the value of the pound and the main stock market index both fell. In response, the Chancellor has now backtracked on one of the unexpected tax cuts – the abolition of the 45% top
rate of income tax for those earning more than £150,000.
The Chancellor put off the publication of plans to reduce government debt over the medium term, and full economic and fiscal forecasts. It would be fair to say, the government is taking big but potentially risky steps to promote growth.
Significant points
• reversal of the April 2022 increase in
National Insurance rates with effect from 6 November 2022
• cancellation of the Health and Social
Care Levy that was to be introduced in April 2023
• cancellation of the 1.25% addition to
Stuart Noakes Partner, Head of Tax Services Group
dividend tax rates that was introduced in April 2022, with effect from April 2023
• basic income tax rate cut to 19% a year early, from April 2023
• cancellation of planned corporation tax increase to 25% in April 2023: the rate will remain 19%
• increases in thresholds for Stamp Duty
Land Tax with immediate effect
• from April 2023, repeal of the ‘offpayroll working’ measures introduced in 2017 and 2021
• confirmation of energy cost support packages
The sudden announcement of significant tax changes can make it hard to keep track of what is changing and when, and how it affects your finances. Below we cover the main areas that will be of extra interest.
Energy costs
The Chancellor began his speech with what he described as the issue most worrying the British people – the cost of energy. He did not announce any new measures, but summarised the support that has already been announced: the Energy Bills Support Scheme, which will provide a £400 nonrepayable discount to eligible households to help Emergency Budget 23 September 2022 with their energy bills over the coming winter, and a new Energy Price Guarantee, which will reduce the unit cost of electricity and gas so that a
typical household in Great Britain pays, on average, around £2,500 a year on their energy bill, for the next 2 years, from 1 October 2022.
The Energy Price Guarantee limits the amount a customer can be charged per unit of gas or electricity, so the exact bill amount will continue to be influenced by how much energy the consumer uses.
There are further measures to support businesses, and different arrangements for people on different types of energy supply contracts. The Chancellor noted that the volatility of the energy market meant that it was not possible to be sure of the cost to the government of this support, but it is estimated to be £60 billion over the next six months.
Personal income tax
In March 2022, Rishi Sunak announced his intention to cut the basic rate of income tax from 20% to 19% from 6 April 2024.
This was costed at over £5 billion a year and was said to be conditional on the government continuing to meet its ‘fiscal rules’ – borrowing going down and not being required for day-to-day spending. Kwasi Kwarteng has brought the cut forward by a year to 6 April 2023, with no conditions attached. For someone earning over the 40% threshold of £50,270, this will mean a reduction in income tax of £377 in 2023/24.
National Insurance Contributions
From 6 April 2022, the rates of Class 1 NIC paid by employers and employees, and of Class 4 NIC paid by selfemployed people, were increased by 1.25 percentage points. These increases were a temporary measure for the tax year 2022/23, pending the introduction of a separate Health and Social Care Levy (HSCL) to be paid by the same people on the same income from 6 April 2023. The Chancellor has decided to cancel the HSCL altogether, and to cancel the increases in NIC from the earliest practicable date – 6 November 2022. It is recognised that some payroll software may not be able to deliver the reduction to the old rates in time for the November payroll, but affected employees should receive a rebate retrospectively with their December payments.
Stamp Duty Land Tax (SDLT) thresholds
With effect from 23 September 2022, the threshold above which SDLT must be paid on the purchase of residential properties in England and in Northern Ireland will be doubled from £125,000 to £250,000.
At the same time, the thresholds for firsttime buyers will increase from £300,000 to £425,000 and the maximum value of a property on which a first-time buyer can claim relief will increase from £500,000 to £625,000.
These changes may save first-time buyers up to £11,250, with savings of up to £2,500 for other purchasers.
Annual Investment Allowance (AIA)
The 100% AIA, which is available to companies and unincorporated businesses, is available for qualifying expenditure on plant and machinery (P&M) up to £1 million. The limit was intended to drop to £200,000 for expenditure after 31 March 2023, but the higher limit has now been made ‘permanent’. This is described as intended to ‘support business investment, provide businesses with more stability, and make tax simpler for any business investing between £200,000 and £1 million in plant and machinery’.
Corporation Tax – rate of tax
As widely expected, the Chancellor confirmed that the planned increase in the main rate of corporation tax from 19% to 25% will not now take place on 1 April 2023, reducing government revenue by an estimated £67 billion over the next five years.
The government states that ‘this will maintain a competitive business tax regime, which will support investment, innovation and economic growth in the UK’.
Get in touch
We will be happy to help you adapt and reassess your plans in light of any legislative changes. Please get in touch on 01903 234904 or visit www. carpenterbox.com for more information.
Information correct as of 4 October 2022.
Don’t panic! Fixed rate mortgages ARE still available
Rob Starr, CEO of Seico Mortgages, provides a reassuring update on the current extremely negative media coverage of the mortgage market surrounding interest rates and fixed rate deals being withdrawn by some lenders.
The mortgage market has had the biggest interest rate rise in over 20 years, which means higher monthly payments for anyone not on an existing fixed rate or for anyone wanting a new mortgage now. Not great news, but not exactly unexpected either. It is important to be aware, despite what the media will lead you to believe, that there are fixed rates available. In fact, there is still a huge choice on fixed rates, from two years to five years and even 10 years. A fixed rate gives you the comfort to know that even in a tough and changing financial climate that your mortgage payments will not increase. Anyone on a variable rate or about to see their current fixed rate expire, should consider taking advantage of a new fixed rate now and make sure that they can weather the storm until it eventually runs out, which if history tells us anything it will. Currently we are seeing lenders starting to remove a number of their fixed rates as they wait to see what the Bank of England will do over the next few months, so it is important that you speak with a Whole of Market broker as soon as possible. Not only can we offer you choice from across all lenders and make sure that you do not miss out on the best deal available on any given day to suit your own position, but also we can hold a rate for you today for up to six months, so you are prepared and ready without fear of yet another increase. We also saw unexpected, good news after the Bank of England interest rate increases - the help that followed straight afterwards. Firstly, there is a stamp duty adjustment, which increases the allowance from £125,000 to £250,000 and even better for first time buyers as they see an increase from £300,000 to £425,000. This could not have come at a better time for people wanting to buy their first home or move home.
Finance
Seico Group is a Whole of Market Mortgage Brokerage that has been assisting residential and commercial clients with all their property and personal insurance needs since 1991. A whole of market broker like Seico has access to all the very best Fixed Rate deals - including those not on comparison sites or the high street.
Simply talk to us to see what’s possible and we can get the rate that is most suitable for you.
Rob Starr CEO – Seico Group
01273 778888 mortgages@seicogroup.com
www.telegraph.co.uk
Andy Page
Business finance: whatever happened to your Bank Manager?
That’s the question asked by Andy Page, Head of Commercial Finance at Seico Group.
Ask anyone to name a famous bank manager - not that there are many to choose from, admittedly - and they will almost certainly come up with the name of George (Captain) Mainwaring, who is long-departed and, of course, did not even exist in the real world in the first place. A TV character whose many comedic faults became the stuff of British folklore, Mainwaring was the quintessential bank manager who knew all his customers inside out - which ones were good for the money and also had the authority to look after them accordingly. Most business people reading this are likely to have enjoyed that type of relationship with their bank manager at some stage, but probably not for a while. It’s more likely that their accounts are now dealt with by a telephony unit and that their former manager has left the bank. So, what can the customer do if they need to discuss their plans? Well, I’m one of the ‘missing’ bank managers, with 25 customer-facing years on the clock, and I now work in the Commercial Department at Seico, who are a long-standing and respected mortgage brokerage. I’m doing pretty much the same job today as I did in the bank - I have the same discussions now with business people as I did when I worked on the High Street. One major difference is that I can discuss the whole of the market as opposed to just one bank’s products. Businesses still need to have these discussions and because at Seico we look
at the entire market. I have the flexibility to be creative and to get the best deal for Finance each customer. As an example, I recently saved a healthcare business around £200k over the course of a five-year loan, compared to the ‘best’ offer they were able to arrange themselves. I’m always ready to talk to people about their future plans - whether they’re being looked after by their bank or not. If someone has a good business idea it needs to be put in front of the right lender and it’s my job to do that. If this sounds like you and you’d like to talk about it, please don’t be shy about getting in touch.
