UK: A Time Of Change

Last Updated: 20 January 2016
Article by Victoria Mahon de Palacios

The Chancellor's Summer Budget on 8 July 2015 was a full Budget in terms of content for wealth management practitioners. The Finance Bill (No 2) 2015 was published on 15 July but, at time of writing, has not received royal assent (expected in the late autumn).

As expected, the Summer Budget included a new inheritance tax (IHT) residence nil-rate band (RNRB) for the family home, with the aim of allowing a family home worth up to £1m to pass on death free of IHT. However, there are notable restrictions in the detail, and the announcement, while welcome in principle, is exclusive in practice.

The RNRB will be phased in for deaths from 6 April 2017, beginning at £100,000 and rising to £175,000 from 6 April 2020. It will be transferable between spouses and civil partners, bringing the total nil-rate band available to spouses and civil partners to £1m between them from April 2020.

However, the family home must pass to 'direct descendants' (broadly, children or their spouses, civil partners, or widow/ers), meaning childless couples cannot benefit, and relief will be tapered for those estates exceeding £2m, such that, from 2020/21, the allowance will be nil for estates worth in excess of £2.7m (assuming the maximum transferable RNRB of £350,000 is available).

The Budget also included a package of measures to reduce the tax benefits enjoyed by non-UK domiciled individuals, all of which are subject to consultation, with legislation expected in the Finance Bills 2016 and 2017. UK 'deemed domiciled' status will be introduced for all tax purposes for those non-doms who have been resident in the UK for 15 out of the last 20 tax years. A separate UK 'deemed domiciled' status will be introduced for 'returning UK domiciliaries' (to prevent those with a UK domicile of origin who subsequently acquire a foreign domicile of choice from keeping that foreign domicile if they take up residence in the UK).

Lastly, there was a final blow for offshore structures holding UK residential property, already heavily taxed following the introduction of the annual tax on enveloped dwellings, with the announcement that they will be brought within the IHT net in respect of their UK property. We await the consultation documents on these announcements.

The Finance Bill (No 2) 2015 also included the changes announced in the Autumn Statement 2014 to the taxation of IHT-relevant property charges, most notably the introduction of 'same day addition' rules affecting multiple or pilot trusts. From the date of royal assent, it will no longer be possible to set up pilot trusts to receive a lump sum from a will in order to give each trust its own nil-rate band for IHT-relevant property purposes. As the trusts will receive their shares of the estate on the same day (i.e. the date of death), their values will effectively be aggregated for IHT purposes and will share a single nil-rate band. Existing affected pilot trusts are 'protected' (subject to conditions) until 6 April 2017.

LPAs and deputies

On 1 July 2015, new lasting power of attorney (LPA) forms, whereby individuals can appoint someone to manage their financial affairs and make decisions regarding their health and welfare in the event that they may lack capacity to do so themselves in the future, were introduced. The new forms do away with some of the previous formalities for making an LPA, as well as being shorter and easier to use. This is a welcome improvement in the LPA-making process, the benefit of which should filter down to the client as the costs for solicitors instructed to prepare these should now reduce.

For those who do not have the opportunity to make an LPA, the Court of Protection has agreed that successive deputies can be appointed where the facts require. In the case of Re H [2015] EWCOP 52, the court agreed to appoint successive deputies for a severely autistic young woman (H) lacking mental capacity to manage both her financial affairs and welfare in the event her parents could no longer continue to act as deputies. The overriding factor in the appointment in this case was providing H's parents with peace of mind in knowing that persons they had chosen would continue to manage H's affairs when they were no longer able to do so.

This was an unusual decision as, although it is possible to appoint successive attorneys under an LPA, the court has rarely appointed successive deputies, seeking to ensure that deputyship orders are as limited in scope and duration as practicable. The case indicates the court will move away from routinely dismissing such applications, as appeared to be the approach previously.

Challenges to wills

There has been much in the press about the case of Ilott v Mitson [2015] EWCA Civ 797, where the deceased's only daughter successfully challenged her late mother's will, which left her estate to charity, so that she was awarded a one-third share in the estate.

In England and Wales, individuals can leave their estate to whomever they like. However, claims for reasonable financial provision from their estate can be made following their death by their spouse, civil partner, cohabiting partner, child or someone treated as their child, and someone maintained by the deceased.

Successful claims by able-bodied adults who can earn their own living, such as the daughter in the Ilott case, have previously been limited. The press have therefore described the case as opening the floodgates to more claims being brought against estates by dissatisfied relatives and undermining the principle of testamentary freedom.

While this case does show that able-bodied adults can bring successful claims against estates for financial provision, each case will depend on its individual facts. In the Ilott case, the fact that the deceased had little connection to the charities she named in her will and apparently no good reason to exclude her daughter from benefit, tied in with the fact that her daughter would face poverty without financial provision while the animal charities named in the will had no such human need, were significant in the court reaching its decision.

Testamentary freedom still remains following Ilott. However, the case highlights the need for testators to carefully consider their reasons for excluding certain family members from their wills and ensuring that the reasons are explained in a side letter to a will to seek to prevent successful claims against their estate.

Brussels IV

On 17 August 2015, the EU Succession Regulation 650/2012, colloquially known as Brussels IV, came into effect. The regulation aims to harmonise succession laws across the EU with the introduction of a single set of rules to which all member states (which have adopted the regulation) are subject. Previously, member states had their own separate succession laws, which often led to confusion, delay, and expense for citizens with cross-border estates while it was determined which country's laws applied.

The default position under the regulation is that the law of the country in which the deceased was habitually resident when they died will be recognised as the governing law for the succession to all assets in the deceased's estate.

However, the regulation also allows those with EU assets to make an express election in their will for the law of their nationality to govern the succession to their worldwide estate. Such an election can also be implied in certain circumstances. The regulation therefore simplifies, and revolutionises, cross-border EU succession, and for the first time allows individuals to control the succession to their assets with effect across the EU – but there are question marks over how the regulation will work in practice from a UK perspective.

The UK has not opted in to the regulation (neither have Ireland or Denmark), but it will nevertheless affect UK citizens with EU connections. One of the key areas of doubt is whether the UK is defined as a 'third state' or 'member state' for the purposes of the regulation, as this affects whether or not the private international law concept of 'renvoi' still applies, and ultimately whether the law of England and Wales will be recognised by EU courts in certain situations, for land and buildings in an EU state in particular.

We are likely to need European Court of Justice case law before there is absolute clarity on how the regulation will work in UK-EU cross-border cases, but, in the meantime, clients with EU connections should consider whether to make an express election in their will.

Previously published in the Solicitors Journal

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.