If you are administering an estate of someone who has died, then as the personal representative you need to make sure that you understand how to deal with the income tax and capital gains tax in the administration period.

The administration period is the time from the date of death to the date that everything has been paid out or distributed in an estate.

From 5 April 2024 estates with all types of income up to £500 in every tax year of the administration will not pay income tax and that income does not need to be reported to HM Revenue and Customs.

At the other extreme certain estates must be registered for Self-Assessment with HM Revenue and Customs and they call these estates ‘Complex Estates’. A ‘Complex Estate’ is one which:

(i) has assets of over £2.5 million or
(ii) where assets are sold in any one tax year of over £500,000 or
(iii) where the total tax liability (income tax plus capital gains tax) due over the whole administration period is over £10,000.
The registration is done online through HM Revenue and Customs Trust Registration Service and a Unique Taxpayer Reference is sent to the executor in the post. This is different to the Unique Taxpayer Reference that the deceased would have had if they were completing lifetime tax returns and it is important not to muddle them up!

Once the estate is registered as a Complex Estate expect Tax Returns to be issued and it is important that these are submitted on time or penalties will be issued.

If the estate is neither ‘Complex’ nor has less than £500 of income in every tax year, then HM Revenue and Customs should agree to deal with the income tax and capital gains tax in the estate informally by letter at the end of the administration period. See https://www.gov.uk/probate-estate/reporting-the-estate

Estates do not get any personal allowances for income tax and pay tax at the basic rates of 8.75% on dividends and 20% on all other income. The personal representatives should give the beneficiaries tax certificates to show them their share of the income received and tax paid, so the beneficiaries know what to put on their own tax returns.

During the administration period, ISAs are not subject to income tax or capital gains tax for three years from the date of death or when they are closed, sold or transferred. So, the income and gains from ISAs do not need to be put on the estate tax return or declared informally or included in the £500 tax-fee amount during this time.

From 6 April 2024 estates have an annual capital gains tax allowance of £3,000 and an ordinary capital gains tax rate of 20% with an additional 8% for residential property. If you sell a property at a gain from the probate value in the administration period do take advice before you exchange contracts to see if you can reduce the Capital Gains tax due.

If there is a chargeable gain on a residential property, then the personal representatives will need to complete a Residential Property Capital Gains Tax return within 60 days of completion and pay the capital gains tax. Be careful when you come to complete the capital gains tax pages of the estate income Tax Return (if one is required) with the same information and don’t forget to fill in box 5.8A with the capital gains tax that you have already paid so it all ties up nicely with HM Revenue and Customs records.

Tax in the administration should not be too complicated or too onerous, it just needs the personal representative to keep good records and know what needs to be done and when. If we are instructed on a full administration of an estate, we will advise you as appropriate throughout the administration to ensure that the obligations of the personal representative re tax in the estate are all met.

Please can tact me, Lucy Hollingsworth if you need any advice on the above.

Recently we have seen the high-profile issue of squatters occupying celebrity chef Gordon Ramsey’s empty premises in central London (https://www.bbc.co.uk/news/uk-england-london-68806116).

Interim Possession Orders (IPO) can be a helpful tool for property owners facing unauthorised occupation or squatting on their premises. As a means of swiftly reclaiming possession, the IPO procedure aims to make it quicker to recover vacant possession of a premises that is illegally occupied.

What is an Interim Possession Order?
An IPO is a court order that enables property owners to regain possession of their property swiftly when it has been unlawfully occupied. Typically, this applies to scenarios where individuals have entered and are occupying premises without permission or a legal right, commonly known as squatting.

When Can an Interim Possession Order Be Granted?
To obtain an IPO, certain conditions must be met:

Illegal Occupation: The premises must be illegally occupied, meaning the individuals present have no legal right to be there.
Notification: The property owner must provide notice to the occupiers, informing them of their intention to seek possession of the premises.
Prompt Application: The property owner must apply for an IPO promptly, within 28 days, after discovering the illegal occupation.
The Process of Obtaining an Interim Possession Order:

Application: An IPO is applied for in the County Court nearest the premises.
Service of the application: within 24 hours of the issue of the application, the property owner must serve notice of the upcoming Hearing on the occupiers.
Hearing: The court will hold a hearing to assess the evidence and determine whether an IPO should be granted.
Service: If granted, the IPO will be served on the occupiers, usually providing them with 24 hours to vacate the premises voluntarily.
Possession: If the occupiers fail to vacate within 24 hours, the property owner can apply for a Warrant of Possession, which will enable the property owner to regain possession with the assistance of a High Court Enforcement Officer.
Benefits of Interim Possession Orders:
Speed: IPOs offer a swift resolution compared to traditional eviction processes, allowing property owners to regain possession in a more timely manner.
Legal Protection: By obtaining a court order, property owners can protect their rights and property interests while avoiding potential legal disputes.
Deterrence: The threat of an IPO can deter individuals from unlawfully occupying property, serving as a preventive measure against squatting.
Cost-Effective: IPOs can be a cost-effective solution for property owners, minimising the financial burden associated with prolonged legal proceedings.
Interim Possession Orders provide property owners with a valuable remedy for reclaiming possession of unlawfully occupied property. By following the proper procedures and obtaining a court order, property owners can swiftly regain control of their premises.

If you are faced with unauthorised occupation or squatting on your premises speed is of the essence and we are here to assist. If you need help with unauthorised occupation or squatting, please do get in touch.

We are here to help – 0800 84 94 101

Many people wish to include in their Will some simple wishes regarding their funeral, but this is usually a simple statement regarding a preference to either be buried or cremated. Under the present law, these wishes are not legally binding. The best way to ensure your wishes will be respected is to make everything as clear as possible.

We often note that this is the only extent to which their loved ones were aware of what their funeral wishes are. However, if you have ever had to plan the funeral, you will be aware that there is a lot more to think about from the location of the service and wake to who should officiate.

Other decisions include the flowers, hymns/music and poetry choices or even the general tone of the funeral. Would your loved one prefer a more traditional service or a celebration of life? Discussions regarding all these things and budget can quickly be a source of contention between loved ones.

When several people are involved in arranging a funeral, there can be differences of opinion and potential disagreements, especially when emotions are running high. Leaving clear instructions will help everyone give you the funeral you would like.

Understandably, it’s difficult to acknowledge that you, or someone you love, will one day no longer be here. However, it’s important to ensure that your end-of-life wishes are known and respected. This can be a difficult conversation, so we recommend that you take some time to formulate your ideas in writing in your own time.

In order to help our clients do this, we have introduced a new funeral wishes form which can be used to provide as much detail as our clients would like regarding their wishes. This can be stored alongside their Will for their Executors to request, and our clients can provide copies to their loved ones to hold onto.

This form assists our clients’ loved ones to make the key decisions in relation to arranging the funeral and answers the most important questions such as:

Is there a pre-paid funeral plan?
Will it be a burial or cremation?
Do you have wishes regarding the location of the service?
Are there any more detailed burial wishes such as the depth and location?
What flowers would you want?
Would you like charity donations and do you have any in mind?
Do you have a preference regarding your Coffin, the transport, tone, clothing, music, or poems?
The link to our funeral wishes form can be found on the Wills section of our website which you can access using the link below:

https://www.mayowynnebaxter.co.uk/our-services/private-client/wills/

Q) We have an employee who has unfortunately been off sick for a long time. He has exhausted their entitlement to sick pay, and we have received a medical report which confirms he will not be fit to return to work for the foreseeable future. We have no suitable redeployment options available. We are currently discussing the situation with him, and he has asked us to confirm what he would be entitled to if he is dismissed due to ill-health, particularly bearing in mind that he has exhausted his sick pay entitlement. Would he be entitled to notice pay in this situation?

A) The employee will be entitled to notice in accordance with his contract, or the statutory minimum notice if that is greater. The statutory minimum notice required by an employer is 1 week for each year of service, up to a maximum of 12 weeks. So, for example, if a contract of employment says that someone is entitled to 4 weeks’ notice, but they have been employed by the employer for 6 years, they will be entitled to 6 weeks’ notice.

However, the position regarding notice pay when someone is dismissed due to ill-health in these kinds of circumstances can be complicated, because it isn’t necessarily straightforward whether they should receive pay for their notice period or not.

Logic suggests that if the employee has used up their entitlement to sick pay, then they should not be paid for the period of notice – after all, if the employer did not dismiss and simply left them as an employee, then they would not get paid. However, the law is not that logical or simple! Under the legislation, an employee in this situation is entitled to be paid for notice of dismissal given by their employer if their notice period is either the statutory minimum, or up to 6 days more than the statutory minimum. However, if their notice period is 1 week or more greater than the statutory minimum, they are not entitled to be paid during their notice period.

Here are some examples help to illustrate the workings of this strange statutory provision:

An employee has a contract of employment which provides for 1 month’s notice. The employee is dismissed after 30 months due to ill health and his entitlement to all sick pay has been used up. He is therefore entitled to statutory minimum notice of 2 weeks (2 full years’ service). His contractual notice at 1 month is more than 1 week greater than this, so the employee is not entitled to be paid.

The same employee has 4 years’ service when he is dismissed. His statutory notice is now 4 weeks, so he is entitled to be paid as his contractual notice of 1 month is less than 1 week more than his statutory notice.

An employee with 20 years’ service has a contract of employment which provides for 3 months’ notice. She is dismissed for ill health and her entitlement to all sick pay has been used up. Jer statutory notice is 12 weeks (the maximum), so her contractual notice at 3 months is 1 week more than this. She is therefore not entitled to be paid.

The same employee has a contract which provides for 1 month’s notice, or one week for each year of service up to a maximum of 12 weeks, whichever is the greater. Her notice entitlement is therefore 12 weeks, which is the same as her statutory notice. She is therefore entitled to be paid.
It is worth noting that the position may be different if the employer makes a payment in lieu of notice, so if you are considering doing that then it is best to take advice (we can help!).

So why was the legislation drafted in this way? We have no idea! The rules have been like this for many years, and we have never understood the logic behind them, nor have we read anything which shines any light on the thought process (if there was one!) which went into the drafting.

Please do contact our Employment Team if you need assistance with any aspect of employment law.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

At the moment, the law states that where employees on maternity leave, shared parental leave or adoption leave are at risk of being made redundant, employers must offer suitable alternative employment to them ahead of anyone else that is also selected for redundancy. So for example, if you have 5 employees doing the same role and you need to reduce the numbers to 3, if one of the employees is on family-friendly leave at the time of the redundancy exercise then they have to be given one of the available roles.

This is sometimes known as a ‘trump card’, as people in that situation have to automatically be offered the suitable available roles by their employer, even if they are not the best candidate.

From 6 April 2024, this ‘trump card’ is going to be extended further, so that as well as applying during family-friendly leave itself, it will also apply in the following circumstances:

Employees who notify their employer that they are pregnant on or after 6 April 2024 will be protected up until the day their statutory maternity leave starts (as well as being protected during maternity leave as they are now).

Where an employee is on maternity leave, they will be entitled to 18 months’ protection, starting from the week after the expected (or actual) week of childbirth. Where an employee is on adoption leave, they will be protected for a period of 18 months after the date of the child’s placement. This means that for those employees who take 12 months’ maternity or adoption leave they will continue to be protected for 6 months after they return to work.

The rules around shared parental leave are also undergoing change, but this is more nuanced and employees will only qualify if certain criteria apply. Given the complexity around shared parental leave it is always best to take specific advice about whether the particular situation you are dealing with might be affected.
It will be important for employers to be mindful of these changes so that they are not inadvertently caught out. Although most businesses are aware of the extensive protection offered to employees during pregnancy and whilst on maternity/adoption leave, the fact that the protection will be continuing after the employee returns to work means that this is something else that will need to be taken into account before conducting any redundancy selection exercise.

Employers should be wary of the fact that failure to apply the ‘trump card’ (where vacancies actually exist) will risk claims for automatically unfair dismissal and unlawful discrimination. Do get in touch with us if you need legal guidance on the best way to tackle a fair redundancy process.

If you would like assistance with an employment issue, please contact any member of our Employment Team.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

In recent years, significant attention has been given to the practice of ‘fire and rehire’, including a number of high-profile cases reported in the media. The practice involves employers dismissing employees and re-engaging them on a new contract of employment with less favourable terms. This could include, for example, changes to salary, working hours, annual leave entitlement or the length of notice required by each party to terminate the contract. Whilst such changes may not be desirable, there may be economic pressure that would cause employers to consider making such changes.

Whilst the practice itself is permissible, it has drawn a lot of criticism and could lead to employees pursuing an Employment Tribunal claim for unfair dismissal if they do not wish to accept the new terms being offered to them. Employers should therefore ensure they act reasonably at all times.

This has led to the Government announcing in March 2022 that they would publish a statutory Code of Practice on Dismissal and Re-engagement. The draft Code was published in January 2023. Following a consultation period, the Government have now published an updated Code and their response to the consultation.

The Code sets out what is expected from employers when they are seeking to make changes to the terms and conditions of an individual’s employment. It aims to strike a balance between allowing employers to adapt to competing business needs and protecting the interests of employees. It acknowledges that there may be circumstances in which employers will need to consider making such changes, but that engaging in ‘fire and rehire’ should be seen as a ‘last resort’ for employers when wishing to implement changes.

The Code states that employers should take reasonable steps to avoid engaging in ‘fire and rehire’ and should explore alternatives before deciding to do so. This will include engaging in meaningful consultation with individual employees or trade unions, explaining the business need for any proposed changes to terms and conditions and seeking approval. Crucially, employers should not raise the prospect of dismissal prematurely or use dismissal as a threat to persuade employees to agree to a change where dismissal is not actually being contemplated.

In order to seek approval to a particular change that would be disadvantageous to the employee, and avoid engaging in ‘fire and rehire’, employers could consider whether they can implement a more favourable change alongside this, in order to improve the overall package being offered to the employee. For example, if an employer wishes to decrease an employee’s salary due to economic downturn, an employer may consider offering an employee an increased annual leave entitlement in order to seek their approval for this change.

Following the consultation process, some minor amendments were made to the draft Code. Some of the key amendments are as follows:

– The Code now states that employers should contact ACAS before they notify employees that they may engage in the practice. Previously, ACAS could be notified at a later stage.
– The Code now states that it is good practice for information to be provided in writing to employees throughout the process.
– When implementing multiple changes, the Code previously said that employers should implement these on a phased basis. The Code now states that employers ‘might wish to consider’ implementing these on a phased basis.
Now that the consultation has concluded and the Code has been updated, the Code is expected to be approved by Parliament and come into force at some point later in the year. Whilst the Code will not be legally binding, Employment Tribunals will be able to give consideration to the Code and may increase an award of compensation by up to 25% if an employer is found to have unreasonably complied with the Code. For this reason, employers should carefully consider the Code. Following the Code will minimise the risk of an employee pursuing and succeeding in any claim for unfair dismissal that arises following an employer seeking to dismiss and re-engage an employee on less favourable terms. If uncertain, employers should seek advice on the process they should follow when seeking to implement changes to an employee’s terms. Do contact us if you require any assistance.

If you would like assistance with an employment issue, please contact any member of our Employment Team.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

As it turns out, not as much as one employer thought!

There are specific regulations covering the rules around taking statutory parental leave, and there is also a separate statutory right to claim automatic unfair dismissal if someone is dismissed because they took (or sought to take) statutory parental leave. In the recent case of Hilton Foods Solutions Ltd v Wright, the employee, the father of an autistic son, was dismissed for reasons which he claimed were connected to him seeking to take unpaid parental leave and were therefore automatically unfair. The employer tried to strike out the automatic unfair dismissal claim on the basis that Mr Wright had not started any stipulated formal process to apply for leave, therefore, in the employer’s view, he had not sought to take it.

An HR representative at the company had informed Mr Wright of the process for applying to take unpaid parental leave, and Mr Wright had subsequently indicated his intention to take it and had a meeting about it. However, before any formal application was the submitted, Mr Wright was dismissed by reason of redundancy. Mr Wright felt the real reason for his dismissal was the fact that he had told his employer about his plan to take parental leave.

The employer had received no formal application for parental leave from Mr Wright, so they argued that it could not be the case that he had been dismissed for seeking such leave. They applied, on a preliminary point, to have the case struck out on the basis that it had no reasonable prospect of success.

At the first stage of the case the Employment Tribunal found in favour of Mr Wright. The Employment Judge found that making informal enquiries, along with a stated intention to take leave, was sufficient to pass the threshold of seeking to take unpaid parental leave.

The employer still felt that a formal application was required, and therefore submitted an appeal to the Employment Appeal Tribunal (EAT). However, the EAT agreed with the Employment Judge who had heard the case in the Employment Tribunal and therefore dismissed the appeal.

The EAT stated that if Parliament had intended to limit the protection against dismissal given by the legislation to those who had given formal notice of wanting to take the leave, it would have been worded differently. As it was, the EAT confirmed that the legislation covered two separate situations. The first was the one relevant to this case, where someone sought to take leave, and the second, where the employee was able to exercise a right to leave because the appropriate notice had been given.

The EAT felt that the employer was attempting to argue that there could be no protection just because no formal application had been submitted, even if there had been an unambiguous statement by the employee of their intention to take parental leave. However, there was nothing in the legislation to specify that a formal application had to have been made in order for someone to be regarded as having the protection. A formal application would leave no doubt about the intention to seek to take leave, but it was not a statutory requirement.

So what does this mean for employers? This case shows us that employers need to be wary of situations like this where people can gain statutory protection in ways that they might not have expected. Although this case was about statutory parental leave, the same principles would apply to other statutory types of leave, and claims for automatically unfair dismissal can be brought with no minimum period of qualifying service.

If you would like assistance with an employment issue, please contact any member of our Employment Team.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.

International Women’s Day provides a valuable opportunity to reflect on the achievements of women and celebrate the progress made not only in the legal profession but in all areas of life towards gender equality.

Historically women have faced numerous obstacles in accessing and excelling within the legal profession, for decades concerted efforts have been made to foster inclusivity and dismantle the systemic barriers that have hindered the progress of women in law.

On reflecting on International Women’s Day 2024 tangible progress can be seen with women in key roles within the legal profession such as in the Judiciary, in law firms and in academia. There are now greater opportunities for women in the legal profession and their contributions are becoming more widely recognised. Women continue to reshape the landscape within the UK legal profession by challenging stereotypes and breaking through barriers in what was once a male dominated profession.

Mayo Wynne Baxter have built and continue to foster a culture of inclusivity and actively promote gender equality within the firm. As a law firm we have implemented initiatives aimed at promoting gender diversity such as unconscious bias awareness, flexible and hybrid working arrangements, mentoring and coaching programmes. As well as a menopause inclusion group. Adopting and promoting such initiatives is crucial in creating an inclusive environment where women can thrive and advance in their careers. In our most recent diversity survey statistics show that women make up an impressive 76.92% of employees within the firm, of those 48.6% are Partners and 44% of Board members are women.

Whilst undoubtedly progress has been made Mayo Wynne Baxter recognise challenges remain within the wider society which will require a multifaceted approach involving legal reforms, cultural shifts and changes in societal attitudes towards gender roles and expectations. Mayo Wynne Baxter are committed to promoting gender equality, diversity and inclusivity within the legal profession and wider legal community to create a future where every woman has the opportunity to pursue a career in law.

See MWB’s latest Diversity Report.

From 06 April 2024, there will be a new statutory right to unpaid carer’s leave for employees. Where an employee looks after someone with a long-term care need, they are entitled to take one week’s unpaid leave per year, which can be taken all at once or in blocks. There is no minimum period of qualifying service required, and so this is a “day one” right.

The Government’s aim with this change is to provide additional support to long-term carers who until now have had to use their annual leave to carry out their caring duties around their work commitments. The hope is that it will help carers to stay in work, and in turn help businesses to reduce their staff turnover.

Who does it apply to?

All employees that have a dependant are covered. This includes the usual groups of people such as spouses and children but also, more widely, any person who reasonably relies on the employee for care.

(It is worth noting that this new right does not change the statutory right to take time off for dependents, which is also unpaid and is designed to provide short-term leave to cover emergency situations).

What counts as a “long-term care need”?

The law is prescriptive on this point, and states that it must be one of the following:

an illness or injury that will require (or is likely to require) 3 or more months’ care.
a disability under the Equality Act 2010.
care in connection with old age.
How much notice is required?

The required notice period is either twice as many days as the period of leave required, or three days, whichever is the greater, and the notice need not be in given writing. The notice can also be waived if the employer chooses to do so.

Is evidence required?

An employer cannot request evidence in relation to the request before granting the leave and they may not outright decline a request, however, they may postpone leave where all of the following apply:

It would lead to excessive disruption to business operations; and
The employee is allowed to take that leave within a month of the period initially requested; and
The notice of postponement is given in writing within 7 days of the initial request setting out why and when it can be taken instead.
If employees already have an existing contractual right to take carer’s leave, an employee will only be permitted to take advantage of whichever entitlement is more favourable, so they cannot benefit twice. In either case, the employee will still benefit from the protection of the statutory scheme, e.g. protection from dismissal.

What happens if an employer breaches this new legislation?

An employee will be able to bring an Employment Tribunal claim in the event their employer unreasonably postpones or prevents an employee from taking this leave.

Now that the new right is coming into force, employers should consider what practical adjustments they need to make, for instance adding details of carer’s leave to staff handbooks, leave policies and making changes to internal HR booking systems. It will also be important to ensure managers are trained so that they are aware of the new right and know how to handle requests.

If you would like assistance with a potential constructive dismissal case, please contact any member of our Employment Team.

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.