Archive for March, 2011


Inheritance Tax, CGT and charitable giving
WE Solicitors can provide you with further guidance when making your Will and advise you how Inheritance Tax will effect you. If you are an Executor we can advise you on the tax liabilities of the estate. WE Solicitors, Ivy Mill Crown Street Failsworth Manchester M35 9BG.Telephone 0161 683  3191 

 email jo-ann.mason@wesolicitors.com


Inheritance Tax

The June Budget 2010 confirmed that the inheritance rate nil rate band will remain frozen  until 2014-15

Rates and Allowances, 23 March 2011

Inheritance Tax           2010-11        2011-12

Rate                                           40%                40%

Nil Rate Band                     £325,000        £325,000

*Budget 2011 announced that from April 2012, a reduced rate of IHT of 36% will be introduced where 10 per cent or more of the net estate is left to charity.

Capital Gains Tax Annual exempt amount — The annual exempt amount for capital gains tax will increase in line with statutory indexation to £10,600 with effect from 6 April 2011.

Capital Gains Tax

Rates for individuals:

Gains before 23  June  2010:                 18% / 28% (note 2) 

Gains on or after 23 June 2010:           18% / 28%(note 4)

Rates for trustees andpersonal representatives

Gains before 23 June 2010:        18%

Gains on or after 23 June:            28%

Annual Exempt Amount (AEA)for individuals and personalrepresentatives (note 1)     

2010:        £10,100  

2011:        £10,600

Annual Exempt Amount (AEA) for most trustees                       

2010:  £5,050     

2011:    £5,300

Notes

1. Personal representatives are entitled to the annual exempt amount for the tax year in which the individual dies and the next two years.

2. Individuals gains from 23 June 2010 are charged at 18% up to the limit of the basic rate income tax band (if any), and at 28% on gains above that limit.

3. Tax Year 2010-11: Where Entrepreneurs’ Relief applies, gains before 23 June 2010 are reduced by 4/9 and charged at 18%; qualifying gains on or after 23 June 2010 are charged at 10% (with no 4/9 reduction).

4. Tax Year 2011-12: Rates for Individuals 18% up to the limit of the basic rate income tax band (if any) and 28% on gains above that limit.

5. Companies are not within the charge to Capital Gains Tax. Corporation

Charitable Giving Gift Aid donor benefit limits — Legislation will be introduced in Finance Bill 2011 to increase, from £500 to £2,500, the maximum value of the benefits that individuals and companies may receive as a result of making a donation to a charity of more than £10,000 under Gift Aid. The new limit will be subject to the existing rule that the benefit must not exceed five per cent of the gift.

Other tax measures affecting charities

2.116 Inheritance tax: reduced rate for charitable donations – From 6 April 2012, the Government will introduce a reduced rate of inheritance tax of 36 per cent for estates leaving 10 per cent or more to charity. (Finance Bill 2012) (50)

Information from HMRC website

South Tyneside has increased the price of cremation by 18%, while Renfrewshire has put up the cost of buying a grave plot by 47%.

However, the average cost of a UK funeral has fallen as families hit by the increases cut optional extras such as flowers, according to a report Sun Life Direct.

The average cost of arranging a funeral in 2010 was £6,801 – £297 less than in 2009. This was because discretionary costs fell from an average of £2,156 in 2009 to £1,745 in 2010.

But the overall decrease masks a small rise (4.5%) in the costs of the non-discretionary costs, pushing the basic cost of a funeral up to £2,857. As well as an increase in council charges for burial and cremation, doctors’ fees and funeral directors’ costs have also risen.

At the same time, figures released by the Dying Matters Coalition found that half of UK adults have not made any financial provision for their deaths or even discussed their wishes with loved ones – leaving behind sizeable funeral expenses for relatives to cope with.

Dying Matters revealed that 60% of adults, including 25% over-65s, have not made a will, 82% do not have a pre-paid funeral plan and 46% have not made any financial provision for their own death.

The research also shows that fewer than 10% of people shop around and seek quotes from more than one funeral director.

To read more Click on Link to Dying Matters:

http://www.dyingmatters.org/news/93

Regulation of will writers

The Law Society is concerned by the absence of regulation for will writing and the damage that the absence of such protection can have on the public. It has launched a campaign calling on the Government to make will writing a reserved activity.


It is time for action to protect consumers

Storage problems – The Law Society received many examples of clients being unable to locate a will, wills being unprotected and/or kept in inappropriate places, significant and/or ongoing charges for storage of the will being charged.

“I recently prepared new wills for a local couple. The husband provided me with a photocopy of their previous wills which were produced by a will writing company. He says a few months ago he received a telephone call from ‘another firm’ saying his original wills had been found dumped in a field. He now has no idea where the original wills are or how to get hold of them. I have looked up the will writing company and immediately came across an article which seems to verify this story.”

“A client was charged about £150 to make a will but then a standing order of £149 per year was set up for storage fees”.

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Executorships – Examples included charging consumers a significant upfront fee to guarantee a discounted executor fee, will writers naming themselves as executor without explaining this to the consumer, and problems arising out of an unregulated will writer being named as an executor.

“A couple made wills with the same will writer and appointed him sole executor. This is despite the fact that they have three adult children. The husband in the couple was seriously ill at the time and died shortly afterwards. His widow does not recall appointing the will writer or discussing this with him and says she has no information from him with regard to his fees or terms of business.”

“A client instructed a will writer who had advertised his services at £49 plus VAT. The client ended up issuing a cheque for £3,000 to the will writing company as they had taken an advance on their probate fees.”

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For full details go to

http://www.lawsociety.org.uk/newsandevents/news/majorcampaigns/view=newsarticle.law?CAMPAIGNSID=297440   to download the manifesto

Read the full extent of the detriment caused to consumers

Drafting a will is a complex activity and should not be undertaken by someone without training and knowledge in this field. What may seem like a straightforward will may turn out to be much more complex once the correct questions are asked of the consumer. There may be children from a previous marriage, complicated family relationships, diverse investments and tax implications that may mean that detailed advice and planning are required. Professional skill is always required when drafting a will and undertaking related services.

Will writing is unlike other legal activities in that most mistakes or defects are often not found until after the client has died, which makes rectification more difficult if not impossible in some cases. A significant number of individuals make a will long before their death, this could be 20 years or more, and by this time if any problems are found there will not usually be any redress available from an unregulated will writer who may no longer even be operating as a business.

Solicitors – a model for consumer protection

Solicitors operate within a thorough and tough regulatory system that includes a number of protective elements. Together, these help identify problems in the provision of legal services, prevent them from recurring, and act as a vital safety net for consumers when something goes wrong.

While solicitors have long been subject to these forms of regulation, they are now the standards set by the Legal Services Board, under the Legal Services Act 2007. Making will writing a reserved activity would be the first step in bringing these protections to everyone making a will.