The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
Well, the honest answer at this stage is ‘we don’t know!'. Not altogether helpful I appreciate but, unfortunately, it is a true reflection of where we are!
The Conservative Manifesto promises to increase the Nil Rate Band (NRB) for Inheritance Tax purposes. The NRB is the amount or value in your estate that can be left to your chosen beneficiaries free of any inheritance tax. The present NRB is £325,000 and has been at this level since 2009. As house prices have gone up, more estates have fallen into the Inheritance Tax net. The headline grabbing summary from the Conservative Manifesto on this issue is ‘Nil Rate Band to increase to £1 million’ – but what is the truth?
“And we will take the family home out of tax for all but the richest by increasing the effective Inheritance Tax threshold for married couples and civil partners to £1 million, with a new transferable main residence allowance of £175,000 per person. This will be paid for by reducing the tax relief on pension contributions for people earning more than £150,000.” (Conservative Party Manifesto, 2015)
However, the way it is proposed to increase the NRB is not straightforward. The suggestion is that the ‘normal’ NRB as we know it – and the long standing value of that – will remain as at present but with the addition of a £175,000 main residence relief (or ‘Property NRB’). Whilst any increase in the NRB – and particularly an increase which recognises the increasing value of property – is to be welcomed, lots of questions arise.
As it is proposed this Property NRB is transferable, should this allowance be used on first death or deferred until the second death of a couple? On the one hand, the value of the Property NRB could be increased in the future, and as it is transferable deferring the use of this could enable more value to become tax free. However, any increase to this band will be uncertain.
What happens if there is no property in existence on second death, for example if the survivor has had to go into a care home? Will the allowance be able to be claimed against what is left of the proceeds of sale of the property? Should the Property NRB be used (or crystallised) on first death? And if so, will it be able to be used separately to the ‘normal’ NRB?
Without draft legislation or further announcements as to exactly what is planned for the property NRB and exactly how it will be available, there are no immediate answers. In addition, with the country’s deficit and deficit reduction plans still in the spotlight, the question of timing of this key pledge will be key. We could see legislation in the short-term but equally the manifesto covers pledges to be achieved by the end of this parliament so this announcement could be a long time in coming to fruition
What is clear is that the need for expert advice to ensure that your property and family circumstances are best protected will be more crucial than ever – regardless as to when this policy comes into force.
To make sure your estate is appropriately planned to make provision for those you want to and that taxes are appropriately mitigated, call one of our Personal Planning and Management Team on 0121 212 7404 to discuss how we can help you achieve the best for your family’s future.
'Update' amendment - George Osborne has announced a second budget will take place on 8th July 2015 – we may have more information after that so watch this space for further updates.
The government announced on 16 May that it will provide a fund of £400m to cover the costs of removal and replacement of cladding to high rise residential blocks which have failed tests.
Whilst some people are under the impression that preparing a Lasting Power of Attorney (LPA) is simply a case of completing a form and ticking a few boxes, it is about far more than this.
A big fear for some people facing divorce and the inevitable carving up of the matrimonial assets. They seek assurances that such assets will be “ring-fenced” and retained for them.
Thinking about the legal status of being a cohabitant probably isn’t at the top of the ‘to do’ list.
When an individual is thinking about making a gift to another individual, consideration needs to be given to the Potentially Exempt Transfer (PET) trap.
We are now only a few weeks away from the biggest change to data protection laws in over 20 years. Are you compliant?
The tragedy, in this case, is that there were options readily available to the midwives that they could have used. This was not a case of having to go above and beyond.
Arising from the recent Family Division announcement, people who think they are legally divorced may in fact still be married.
The SCCS has issued providers in the scheme a series of updated and new documents in order to assist with their National Minimum Wage review.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.