Practice Area Archives

Advice for employers on home working

Posted on 9 December 202222 March 2025 by Sarah O'Sullivan

The expectation for flexible working is becoming more and more in demand. According to the office for national statistics, more than 8 in 10 workers who had to work from home during the coronavirus pandemic said they planned to do hybrid work.

Government proposals around changing the rules around flexible working requests include reducing the formal content required for a request, day one rights, as opposed to eligibility currently subject to 26 weeks’ service and allowing up to 2 requests a year. The debate continues around finding arrangements that work for employees and employers and with employers often having to approach how they deal with requests and principles of flexible working, carefully, to reduce the risks of claims and attract and retain good calibre candidates to jobs.

In the current economic climate, businesses may be reassessing their requirements with consideration being given to reducing office space and rental costs, which may result in more companies considering a home-based workforce for the long term.

As we continue to debate what the ‘new normal’ looks like, it is evident that this is something of a moving target with expectations, trends and business requirements seemingly changing quickly. Against this background, it is worthwhile considering what the legal implications are for employers on some of the key considerations around home working.

Contracts of employment

Many employees will be working under contracts of employment with no specific provision to work from home, and the place of work will most likely be stipulated as the employer’s premises.

Unless there is a written term in the contract of employment permitting home working, employers would need the agreement of the employee in order to insist on home working. Imposing a unilateral change without the agreement of those affected employees could constitute a breach of the employment contract. What happens in practice, though, may also be relevant, whether that is around the employer and/or an employee wanting to revisit the ‘normal’ place of work and how work is delivered post Covid-19.

It is recommended that employers check the wording of the ‘place of work’ clause in their employment contracts as the wording may include a degree of flexibility in the favour of the employer, which can allow for a change in place of work on a temporary or perhaps even permanent basis.

If the contract contains wording allowing for flexibility and changes then the employer may not be in breach of the terms by enforcing a permanent switch to home working. Employers should note that it is still important for employers to act reasonably when implementing such a clause, otherwise, they risk breaching mutual trust and confidence – This is a term implied by law in all employment contracts and breach of it is commonly used in constructive unfair dismissal claims. It is also worth keeping in mind that terms can become part of the contract by “custom and practice”. If in doubt, employers should seek legal advice on their particular documentation and issues arising.

In any event, employers are well advised to ensure they communicate with staff in advance and where appropriate, consult as well as set aside reasonable time before implementing changes to the place of work to allow employees time to prepare and adjust.

Where consultation is needed on employment contract changes

Where there is no flexibility to the place of work clause the employer will need to adopt a different approach. Employers will need to discuss the possibility of working from home with employees and consult with them in order to get their agreement to home working along with the necessary change to the terms of their contract. Again, communication is key and a lack of communication is often a key part of disputes arising.

Call our specialist solicitors on 0808 231 1320

Dealing with a refusal to agree to contract changes

If however, employees in this situation maintain a refusal and the employer can demonstrate that:

there are good business reasons for switching to a home-working model,
it has undertaken appropriate consultation and
it has followed a fair procedure;

then it may be possible for an employer to dismiss.

In appropriate circumstances, such dismissals can be considered fair with the employer relying on “Some Other Substantial Reason” as the potentially fair reason to dismiss, provided the employer can demonstrate that the dismissal was reasonable in all the circumstances.

This should be a last resort if there is a failure to agree and the alternatives have been considered. Such dismissals are subject to due process and bring with them the risk of, amongst other things, unfair dismissal claims for eligible employees. Employers who approach such matters without due care will be exposed to claims and again, seeking professional advice early is prudent.

Employers who are faced with this scenario and are looking to dismiss should look to offer those refusing employees re-engagement on the new amended terms, including the homeworking provisions. Consideration should also be given to the numbers of employees affected: if this is 20 or more then collective consultation may need to be undertaken with potentially severe penalties if the right steps are not followed.

Duties towards employees when working from home

Where employees are working from home, employers should ensure that they are treated in the same manner as all other employees. Home-based employees are entitled to the same rights and benefits as any employee working at the employer’s premises.

An employer has both statutory and common law duties towards its employees and is responsible for an employee’s health and safety, “so far as is reasonably practicable”. In practice, this means that employers should conduct a suitable risk assessment of all work activities carried out by homeworkers to identify any possible hazards. Employers will then need to consider these obligations to decide what measures need to be put in place.

Confidentiality and data protection issues when working remotely

In addition to the health and safety aspects of home working, employers will need to consider how to safeguard business confidentiality and data protection requirements with increased chances of breaches taking place when outside of the employer’s premises.

Careful consideration is needed given the potential damage and loss that could be caused through unauthorised breaches, including significant fines that can be imposed by the Information Commissioners Office for breaches of data protection legislation – which has been strengthened since 2018.

It is also key for employers to ensure that they have suitable arrangements in place to help maintain contact with other staff, including office-based and home-workers, in order to limit issues that could arise through increased isolation of working remotely.

Where reasonable adjustments may be necessary

Where an employee has a disability, then consideration should be given to whether the provision of some equipment is required in order for the employer to comply with their duties under the Equality Act 2010 to make reasonable adjustments.

Right to requests for flexible working

It is still the case that employers are not required to agree home working requests from staff. There is no right to work from home and instead, presently, employees with 26 week’s service have the right to request flexible working arrangements.

Buying a listed building

Posted on 24 November 202227 March 2025 by Sarah O'Sullivan

Many buildings in England that were built before the Victorian era, are listed buildings, so it’s not that unusual to find yourself considering buying one. Before you take the plunge, read our guide covering what you need to know about owning a listed building.

Listed buildings are protected by law

This means owners need listed-building consent and planning consent for changes, even minor changes – and that applies to the inside, as well as the exterior. If you don’t get listed building consent before starting work, it’s a criminal, rather than a civil, offence! While this extra red tape shouldn’t put you off buying a listed building, you need to be aware of the challenges and potential extra costs involved before buying.

Additional challenges that buying a listed building brings:

getting permission from the local authority for any changes to the building can take a long time to organise
buying specialist insurance
additional costs to run the building and repair it, using specialist builders and specialist materials
modern adaptations, such as energy efficient changes like insulation or double-glazing, may not be allowed.

What is a Listed Building?

A listed building is one with special historical or architectural interest. It’s protected by the Planning (Listed Buildings and Conservation Areas) Act 1990). They are listed to preserve their special features for future generations of people to enjoy, protecting them from changes, which could damage the building, or are not ‘in-keeping’. In most cases, this covers the whole building (inside and out) plus structures attached to the building, including modern extensions. It can also include outbuildings and garden features.

Generally, listed buildings are from the 19th century or before. England has a good quantity of very old buildings and most of the ones built before 1700, that are still in the original state, are listed. Modern buildings can be listed if they are an example from a famous architect or a good example of a specific style or building technique.

Listed status is granted by the government (the department for Digital, Culture, Media and Sport) on recommendation from an independent panel of experts such as Historic England. There are approximately 400,000 listed properties in England, with three grades:

Grade I (2.5% of listed buildings) – buildings of exceptional interest
Grade II* (5.5% of listed buildings) – buildings of particular importance
Grade II (92% of listed buildings) – buildings of special architectural or historic interest warranting every effort to preserve them.

The different grades carry different limitations so if you’re thinking of buying the building, it’s vital that you know which grade it falls into. Most Grade 1 buildings are owned by the government or major organisations so you will most likely be looking at Grade 2* or Grade 2.

Buying a Listed Building – a checklist of what to do

Although the buying process is the same, you will have different and multiple obligations even if you own the freehold. Never make any assumptions about what you will be able to change. Ask an expert before you buy the property.

Find a listed building expert – the Historic England website has a guide to experts.
Do a listed building map search if you’re viewing older properties (1900 and before) that aren’t advertised as being listed, just to make sure.
Understand why it was listed. The National Heritage List for England will give you the date it was listed, the grade and a description of the listed building, along with the explanation as to why it was listed and the details of the restrictions which helps you understand what you won’t likely be able to change.
Gather all the details together and make sure they’re accurate before you buy the property because you won’t be allowed to change the elements that are listed. Take particular care with extensions – the restrictions may well cover an extension as well.
Get a specialist survey – do not skip this step! Consult with the specialist surveyor who’ll be knowledgeable about construction materials, period features, points of historical interest – their survey report will be very helpful.
make sure you have evidence of previous consent to carry out building work. If the previous people didn’t get this, and you buy the property, it will be up to you to fix any errors; this could be extremely expensive.
Find out if you can get a grant from organisations like Historic England to help pay for repairs. Research grants to find out more about your building may also be available.

What does the local conservation officer do?

You need to make a friend of this person! They will:

tell you what you can and can’t alter – you will need consent from them
help you check the planning history to see if there has been any subsequent documentation and crucially whether any unapproved changes were made in the past. If you buy the house, you could be liable for putting those right.
explain the process which includes consultations prior to the submission, to help make it more likely you will get consent.
help you with the large amount of detail needed, which is far more than for a planning application.

Planning a listed building renovation

You must get consent for everything. Don’t be tempted to leave some things out of your application. Take care over ‘like-for-like’ changes, for example roof tiles and windows, as the rules are complex. You may need to apply separately for every change, for example, a new conservatory, new roof space, swimming pool. Remember the process isn’t fast, so leave plenty of time.

The purpose of listed status is to preserve the building. Kitchens and bathrooms apart, you may struggle to get permission for changes. The planning experts will probably be more keen on changes that bring the building back to how it was in years gone by, when it was first built.

Talk at an early stage to the experts: tradespeople, traditional craftspeople and specialist architects. Listen to their advice because they will have done this many times and their advice will likely save you time and money.

If you get the go ahead, you’ll have to pay a listed building consent fee, the cost of which depends on the scale of your renovations.

Modifying a listed building

You will be allowed to change some things and in fact some changes may be necessary to keep it watertight and in good repair. Common modifications for which you should get consent include:

new roof: take particular care with the style and materials used for roof tiles.
internal layout: altering floorplans by taking down internal walls or remove internal features; even though they are inside.
extensions: these are more likely to get the go ahead if they are smaller than the original building and/or if it’s in the same style, using similar materials.
windows: these have a major impact on the overall look of the building so replacing windows with similar traditional materials tends to get approval more easily. Double glazing can be a problem because it often doesn’t look in keeping, but there are alternatives such as secondary glazing leaving the original windows in place.
period features: fireplaces, cornicing, tiles, floorboards, windows – these sorts of features are likely to need preserving, whether or not you are particularly fond of them.
decorating: your personal taste does not have free rein! You may have to use certain paints or colours or styles to maintain the building’s character. Existing decor, if it contributes to the specialness of the building, will have to stay and be preserved.
exposing brickwork or timber: revealing the building’s original features also needs consent.

Older buildings can be in poor condition

Due to their age, even if they have been looked after, old buildings struggle to compete with modern houses when it comes to things like energy efficiency and keeping out the cold. Four things to look out for when assessing your prospective new home are:

Damp: many older buildings have it because they were built differently; they were built to ‘breathe’ and not built to be airtight. Make sure the roof at least is sound.
Plumbing: poor plumbing will be common and getting that sorted should be a priority to avoid disasters like burst pipes.
Electrics: similar to plumbing, the electrics could be ancient and therefore dangerous. The building regulations on electrics are strict and it’s likely you will need to spend money here. Poor electrics and timber-framed or thatched houses are not a good mix, so you’ll need budget to get the wiring done first.
Draughts: you’re unlikely to win any energy efficiency awards. Ill-fitting windows, gaps in floorboards and poor or non-existent insulation all make for a chilly house. Getting that stuff fixed will all need consent.

Listed building insurance

You will need more than a standard policy. Get a specialist insurance policy that does the following:

takes into account the higher cost of specialist tradespeople
covers you for any unauthorised changes that were made by previous owners that may come to light. You will be liable for those even though there were nothing to do with you
covers the elevated costs of rebuilding in the event of a disaster such as a fire. Organisations such as English Heritage will want it returned to its original state and what that costs is not their worry!

While your insurance policy may be more costly than for a three-bed semi, the peace of mind it brings will be invaluable.

Should I buy a listed building?

Don’t let listed status put you off. If you go ahead, you will become the owners of a beautiful home that stands out from the crowd, is brimming with character and will likely retain its value well, all other things considered. Just make sure you take care with every detailed step. Having an expert conveyancer on your side is always a good idea, so you can rest easy knowing nothing has been overlooked.

New academy at Tees Financial launches with first two participants

Posted on 6 November 202230 March 2025 by Sarah O'Sullivan

Tees Financial has launched a new adviser academy, to train aspiring Financial Advisers. ‘The Academy at Tees Financial Limited’ has enrolled its first two participants, who will follow a structured two-year apprenticeship programme that combines studying for the CII’s Diploma in Financial Advice, with hands on experience of the day-to-day role of a financial adviser.

As well as studying for their Level 4 Financial Adviser exams, the Academy participants will learn on the job, shadowing experienced Tees financial advisers. The programme will provide participants with key objectives to take away from every stage and gives a broad experience of the different roles across the whole of the Firm.

James Appleby, Managing Director of Tees Financial Ltd, commented “The Academy at Tees Financial Ltd is a key part of our long term growth strategy, and we’re proud to be investing in young talented individuals who represent the future of financial advice.”

People person

Percy Sam is one of the Academy’s new recruits. He studied Industrial Design at Bournemouth University, graduating with a master’s degree in 2020. Soon after, he started a full-time office role with Tees Financial Ltd in the Bishop’s Stortford office.

A self-proclaimed “people person”, it didn’t take him long to get to know everyone by name. In November 2021, he saw an advert for the Academy and, encouraged by his colleagues, applied.

Before his interview, he talked to as many Financial Advisers as possible in order to understand the role and whether he really wanted to do it. “I want to help people” Percy says. “Managing your finances isn’t something they teach very well at school”.

Supportive environment

Having successfully passed the application process, Percy started his two-year journey in September 2022. The first month has been “exciting”, he says. “There’s not enough hours in the day!”

As well as getting used to the course structure and “financial services jargon”, he has started studying through the online learning course. He’s particularly excited to start shadowing advisers: “You get to learn whilst on the job and you get to see how it all works in practice as well as theory”.

“Tees is such an amazing place to work” he adds. Experienced advisers are “open and interested to talk about what they do”, which creates a “very supportive” learning environment.

Fitness to finance

Guy Pearson, who studied Exercise, Nutrition and Health at Nottingham Trent University, is also the Academy’s new recruit.

After graduating in 2018, he set up as a Personal Trainer, before the pandemic disrupted his business and prompted him to change career paths. “There are actually a lot of similarities between personal training and Financial Advice” Guy notes. “Both are, fundamentally, about assessing someone’s current situation, finding out where they want to be and planning how they’re going to get there.”

In 2021, Guy joined a large advisory firm but felt that the programme lacked the support and resources needed to study for the Financial Adviser exams. That was when he decided to apply to the Academy at Tees Financial Ltd.

Structure and support

Guy was drawn to the structured approach of the Academy, which allows him to combine a carefully planned study schedule with on-the-job work experience. Tees provides all the support and resources needed for them to excel in the Financial Adviser exams, as well as abundant opportunities to learn from experienced advisers.

Having started in August 2022, he has already begun shadowing advisers. “It’s a great way to gain first-hand experience of the work” he says. “For four days a week, I get to shadow financial advisers, then one day a week I’m following the structured online learning.”

He appreciates the certainty of having the whole pathway mapped out in front of him, as well as knowing that, after two years, he will be a fully qualified Financial Adviser, with abundant work experience to boot.

Role models

The common factor between Percy and Guy is that neither of them expected to end up where they are now.

“The Academy at Tees Financial Ltd offers an opportunity to become a qualified Financial Adviser in two years” says James Appleby. “We’re looking for candidates with the right attitude and aptitude, regardless of past experience.”

“It wasn’t even on my radar” Percy admits. “I knew nothing about financial advising before joining Tees!” Having found his calling now, Percy is ambitious: he wants to become a Level 7 Financial Adviser. “I’ve always wanted to keep progressing” he says. “My goal is one day to match the experience and knowledge of the Tees Financial Advisers.”

Community impact

The Academy at Tees Financial Ltd is a rolling programme, which will welcome one or two new recruits each year. Part of Tees Financial Ltd’s longer-term growth strategy.

“We have a highly professional and experienced team of financial advisers at Tees and The Academy is a chance for them to share their wealth of knowledge with people at the start of their careers” says James Appleby.

Caroline Andrews reflects after speaking at AEPOCS conference

Posted on 1 November 202230 March 2025 by Sarah O'Sullivan

Caroline Andrews, a Fertility Law Solicitor, was invited by the Androgen Excess and Polycystic Ovary Syndrome Society (AEPCOS) to speak on behalf of Verity, a national charity for PCOS, at their annual conference in California, USA. She attended in her role as a volunteer trustee.

At the conference, Caroline emphasised the importance of providing comprehensive support to patients with fertility-affecting conditions. Beyond medical interventions, she highlighted the need for emotional and legal support in an increasingly complex world.

Reflecting on her experience, Caroline noted the stark differences between Fertility Law in the USA and in England and Wales. She shared her insights on fertility treatment and surrogacy practices across these jurisdictions.

Caroline’s perspective on fertility law differences

“It was fascinating to observe how fertility treatment and surrogacy laws differ in the USA compared to here.

In some US states, anti-abortion laws have led to embryos being granted ‘personhood rights.’ This legal shift has significant implications for IVF procedures. In contrast, England and Wales are governed by the Human Fertilisation and Embryology Authority (HFEA), which provides clear regulations on the storage and use of embryos. Hearing firsthand from American women about the impact of Roe v Wade’s repeal was deeply moving.

In July this year, an amendment to the HFEA Act 2008 extended the storage period for embryos, sperm, and eggs to 55 years, subject to the consent of both parties every ten years. Cases in England have debated what constitutes valid consent, particularly when one party passes away. A notable contrast is the USA, where legal disputes like the high-profile case of Sofia Vergara and her ex-partner have brought these issues to light. With more people considering the freezing of eggs, sperm, or embryos, understanding both the medical and legal implications is essential.

Some US states have introduced laws requiring medical insurance to cover certain fertility treatments, helping mitigate the significant costs involved. Meanwhile, in England, the Competition and Markets Authority (CMA) released a report in September 2022, highlighting compliance issues in fertility clinics and concerns about unexpected additional costs. This report is a valuable resource for anyone considering fertility treatment.

Surrogacy law: An international perspective

Regarding surrogacy, the legal framework in England and Wales is often viewed as outdated. The surrogate remains the legal parent until a parental order is granted post-birth. Although the Law Commission has proposed changes to modernise surrogacy law, implementation remains a distant prospect. As a result, some individuals pursue international surrogacy, but they must be cautious about the varying legal restrictions across US states and in England.

A final thought

As a patient representative in my spare time, I’m acutely aware of the emotional, physical, and financial toll of fertility treatment. However, as a family lawyer, I believe it’s equally important for people to consider the legal implications of their choices. How these laws will evolve remains to be seen.”

Stay tuned for a video link to Caroline’s full presentation.

Investing for the long term – lessons from the past

Posted on 27 September 202228 March 2025 by Sophie Soraf

The emergence of COVID-19 brought a rapid end to the drawn-out recovery of major stock markets from the share price lows associated with the financial crisis a decade ago. When the scale of the threat to lives and livelihoods became apparent, market analysts and investors reassessed the global economic outlook and corporate prospects; they didn’t like what they saw and a wave of selling followed, with inevitable consequences. Most share prices, and thus stock indices, were impacted, with market volatility continuing throughout 2020.

Market analysts and investors aren’t infallible, but when something like COVID-19 strikes they get nervous because closed borders, flight bans and lockdowns can pose a threat even to large companies, especially in exposed sectors. Axed dividends and distressed rights issues are anathema to the jittery; and the largest blue-chip companies aren’t immune. Little wonder then that the 100 shares comprising the UK’s blue-chip share index, the FTSE 100, rapidly lost about one-third of their combined value in late Februaryv and March 2020.

Lessons from history

Created in 1984 with a starting level of 1,000 points to provide a wider index of leading shares quoted in London, the FTSE 100 largely superseded the narrower Financial Times 30-share index launched in 1935. As a barometer of economic outlook and corporate prospects, the FTSE 100 has gauged a few storms over the past 36 years. A chart of its progress reveals a plethora of spikes and dips, the starkest of which can be associated with key events in recent financial history.

Chart: FTSE 100 since inception to 1 September 2021, source Yahoo and Trading Economics

Not the first FTSE 100 dip

After its launch on 3 January 1984, the FT’s new share index only slipped very briefly below 1,000 points that year. It then made progress, sometimes faltering, to hit 2,000 points by March 1987, by then buoyed by the effect of the previous October’s ‘Big Bang’ modernisation of the London Stock Exchange’s trading structure. Six months of further upticks followed and the index broke through 2,350 in early October 1987. It would be two years before that level was attained again.

On 19 October 1987, the Monday after The Great Storm ravaged Southern England, global stock markets suffered a crash so severe that the day became known as Black Monday. A tsunami of selling, much of it blamed on new-fangled computer-program trading, rapidly took the FTSE 100 down to around 1,600, starting with an 11% drop on the Monday and 12% the next day.

A 1,000-point drop

High interest rates and other threats to UK economic growth and even talk of an impending recession brought a 1,000-point drop in the FTSE 100 in the autumn of 1998, almost all of it recovered by the year-end. General bullishness continued through 1999, which ended with the index nudging 7,000. As the year 2000 unfolded, a combination of overvaluation, epitomised by the rapidly inflating ‘dotcom bubble’, and a global economic slowdown brought further investor jitters.

The bull market had marched the FTSE 100 up the hill; the ensuing three-year bear market marched it back down again to around 3,600 in the spring of 2003. The index would take another five years to climb back above 6,500, where it was delicately poised for the next big shock: the 2008 collapse of US investment bank Lehman Brothers and the cascade of failures prompting what became known simply as ‘the global financial crisis’. By March 2009, the index was down around 3,500 again.

Long term trend

It was a long haul back from there for the FTSE 100 but, after gyrations associated with various stages of the Brexit process, the start of 2020 saw it comfortably above 7,000. News of a new virus outbreak in an unfamiliar Chinese city seemed at first like a distant threat. As the outbreak turned into a pandemic, global markets faltered again and the FTSE 100 headed below 5,000 before recovering some of the loss. COVID-19 has brought a reset of the blue- chip barometer, the FTSE 100 index.

Despite a variety of market shocks and rebounds, the index still has a long term growth trend. It is important to remember that some market volatility is inevitable; markets will always move up and down. As an investor, putting any short-term market volatility into historical context is useful.

Financial advice and regular reviews are essential to help position your portfolio in line with your objectives and attitude to risk, and to develop a well-defined investment plan, tailored to your objectives and risk profile.

The ascent of the 1990s

Share-price recovery was slow, hampered by a short UK recession in 1991-92 caused in part by high interest rates and an over-valued pound associated with efforts to keep sterling within Europe’s exchange rate mechanism. After Chancellor Norman Lamont took sterling out of the ERM in September 1992, having spent billions and upped base rate to 15% trying to stay in, the index gained about 14% in six months.

As 1994 dawned, a decade on from its launch, the FTSE 100 stood at around 3,400; although then, as now, changes had been made to its constituent shares as companies’ respective market capitalisations waxed and waned. Concerns about the economy and tax plans dampened sentiment and the index fell below 3,000 during the first half of 1994 before starting a five-year ascent to break the 6,000 barrier in the summer of 1998. After a 500% rise in 14 years, what came next for the FTSE 100?

The value of investments can go down as well as up and you may not get back the full amount you invested.
The past is not a guide to future performance and past performance may not necessarily be repeated.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Past performance is not a reliable indicator of future returns and all investments involve risks. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. Tees Financial Limited is registered in England and Wales. Registered number 4342506.

BBC News – Peterborough City Hospital: Ex-doctor warned over treatment withdrawal

Posted on 28 August 202230 March 2025 by Sarah O'Sullivan

Dr Andrew Gregg worked at Peterborough City Hospital, where 41-year-old Simon Scott died in January 2016. A misconduct panel found Dr Gregg “failed to adequately consult with any clinical colleagues regarding [the] decision to withdraw active treatment”.

Speaking on behalf of Mr Scott’s family, Tim Deeming from Tees Law said: “They are incredibly disappointed by the outcome and hope that the coroner’s inquest in due course will be a full, frank and fearless investigation into all of the circumstances.”

Read the full article; Peterborough City Hospital: Ex-doctor warned over treatment withdrawal.

How inflation impacts your finances

Posted on 8 August 202230 March 2025 by Sophie Soraf

Following a sustained period of historically low inflation, the recent upsurge in price pressures has vividly highlighted the impact inflation can wreak on people’s finances. A sharp rise in the cost of living effectively takes a large chunk out of the purchasing power of money and thereby erodes the real value of cash savings. It is therefore important to understand the concept of inflation and the impact it has on your wealth. Here, we consider these issues and look at the potential benefits of longer-term investment as a way of protecting your money from the effects of inflation.

Inflation is a term used to describe the increase in the general level of prices for goods and services over time, with the rate of inflation quantifying how quickly prices are rising. There is no single approach to measuring inflation, partly as figures differ depending upon which specific bundle of goods and services are included in the calculations. However, the Office for National Statistics (ONS) publishes a number of consumer price indices each month which provide its latest estimate of inflationary trends. The UK’s official headline measure is the Consumer Prices Index (CPI) 12-month rate which compares prices in the current month with the same period a year earlier.

Measure inflation

A good way of understanding how a price index works is to think of an extremely large shopping basket containing a mix of the various goods and services a typical household buys – the price index basically shows changes to the overall cost of that basket over time. For the CPI, prices for around 700 things people regularly buy are recorded each month. These cover a variety of items including a loaf of bread and ready-meals, the cost of a cinema ticket and a pint at the local pub, as well as larger items such as a holiday and a car. To calculate the index, ONS compares the current cost of the basket with what it was a year ago – the change in price level is the annual rate of inflation.

The impact of high inflation

A healthy economy generally requires inflation to be low and stable. While a small amount of inflation is considered helpful, high and unstable rates can cause extreme economic difficulties as it erodes the purchasing power of household finances and makes it difficult for people to plan how much they can spend, save or invest. In the UK, the government has a 2% target for how much prices should go up each year with the Bank of England tasked with keeping the figure around that level. The Bank’s principal tool for maintaining a low and stable inflation rate is to raise or lower interest rates.

What is “bank rate”?

Bank Rate is the most important interest rate in the UK and has a significant impact across many aspects of the economy. It is sometimes referred to as the Bank of England Base Rate and is set by the central bank’s nine-member Monetary Policy Committee. The rate directly influences other interest rates, including the lending and savings rates high street banks and building societies offer their customers. The level of the Bank Rate therefore ultimately determines both the cost of mortgages and loans, and how much people can expect to receive on savings held in deposit-based accounts.

Interest rates and inflation

Economic theory shows there is an ‘inverse’ relationship between inflation and interest rates: in other words, when interest rates are low inflation tends to rise, and when rates are high inflation tends to fall. This is because high interest rates make it more expensive for people to borrow money and encourages them to save, which means they typically spend less on goods and services, and this results in prices rising more slowly; and vice versa. So if prices are deemed to be increasing too rapidly, the Bank of England will typically raise interest rates in order to try to slow inflation down.

Purchasing power

When the rate of inflation is low, its impact can seem relatively modest, but when inflation is high it can drastically erode the purchasing power of money. For example, if the rate of inflation is 1%, then the price of a loaf of bread that cost £1 a year ago would now be £1.01. However, if inflation is running at 10%, the price of the same loaf would rise to £1.10. In other words, households can buy less for the same amount of money or, to put it another way, money has effectively lost value.

Inflation makes things more expensive over time.

Impact on savings

Inflation has a similar devaluing effect on deposit-based savings balances. For instance, a saver who held £10,000 in a building society account a year ago earning a rate of 1%, would receive £100 in interest and thereby see their total balance rise to £10,100. However, if inflation was running at 10% then the same £10,000 worth of goods and services that could have been bought a year earlier would now cost £11,000. So, although the saver may feel they have earned £100, when factoring in the effects of inflation, the value of their cash savings has actually declined by £900 in real terms.

Investment potential

While cash savings will always be important, particularly as a source of rainy-day funds, in the current economic climate people holding a large proportion of their assets in cash look set to lose money in real terms. For anyone planning to put money aside for a number of years, it may therefore be worth considering investments as a potential way to protect capital from the effects of inflation. Although past performance is no guarantee of future profits, stock market investments have tended to produce returns that could potentially inflation-proof money over the longer term, providing savers are prepared to take some degree of risk.

Tax-efficient investments

As well as potentially offering protection from inflation, some investment products also enjoy significant tax advantages that make them particularly attractive investment propositions. Both pensions and stocks and shares ISAs fall within this category.

Pensions

Investing via a pension is one of the most tax-efficient methods of saving for the long term as investors receive tax relief at their highest marginal rate of Income Tax on all contributions made subject to annual and lifetime allowances. This means that some of your earnings which would have gone to the government as tax are instead diverted to boost your pension pot. This effectively results in it costing you less to save more in a pension plan.

Stocks and shares ISAs

Individual Savings Accounts (ISAs) are another tax-efficient investment option and provide greater flexibility than a pension as they allow access to your money before the age of 55. Investors can save up to £20,000 each tax year in a stocks and shares ISA with the money having the potential to grow free of UK Income Tax and Capital Gains Tax. These products can be a particularly good way to save for medium or long-term financial goals, such as a wedding or new car.

This graph shows the effect of a 2% inflation rate on £100 over a 40-year period with cash assumed to earn no interest – maybe kept under your mattress! A growth rate of 7% per annum is assumed for equities but is for illustrative purposes only and not an indication of future performance. After 40 years, the initial £100 can only buy goods that would be worth just under £45 at today’s prices, compared to an equity investment which would have the purchasing power of £704.

Obviously, very few of us would keep cash under the mattress, but even with cash deposits earning 1% a year, £1 would only be worth £1.49 after 40 years if held in cash, or over 10 times that amount if invested in equities, assuming a growth rate of 7% p.a.

Can schools ban sausage rolls? Understanding healthy eating policies in schools

Posted on 5 August 202221 March 2025 by Sarah O'Sullivan

A primary school in Bradford found itself under fire from some parents who have called the school’s new healthy eating policy “ridiculous.”

The school banned items such as sausage rolls, pork pies and squash from packed lunch boxes in a bid to encourage healthy living at an early age. The policy is a whole school policy impacting on all pupils who attend. But it does raise the question, can schools really dictate what children eat during the day?

Tees’ Polly Kerr is an education lawyer advising parents on education matters such as: exclusions, appeals, special education needs and education health and care plans. In this article, Polly explains more about lunchbox rules.

In January 2015, the government introduced a new set of rules and regulations, which governed the type of foods that schools could provide to pupils during the school day and it became the responsibility of the school to ensure that they met (and continue to meet) the School Food Standards practical guide updated May 22. These include the following:

1 or more portions of vegetables or salad as an accompaniment every day
at least 3 different fruits, and 3 different vegetables each week
an emphasis on wholegrain foods in place of refined carbohydrates
an emphasis on making water the drink of choice:
limiting fruit juice portions to 150mls
restricting the amount of added sugars or honey in other drinks to 5%
no more than 2 portions a week of food that has been deep fried, batter coated, or breadcrumb coated
no more than 2 portions of food which include pastry each week

Interestingly the School Food Standards regulations do not apply to academies established between September 2010 and June 2014 but it is recommended that they be used as a guide and adopted voluntarily by these schools.

There are some exceptions to these rules, such as parties or celebrations, fund-raising events, rewards for achievement or good behaviour, food used for teaching food preparation or cookery skills and on an occasional basis by parents or pupils. So the odd chocolate bar for celebrating a classmate’s birthday is not prohibited by the regulations.

Schools in England must also provide free drinking water to all pupils at all times whilst they are in school and are prohibited from selling drinks with added sugar, chocolate or sweets in vending machines.

Whilst the government have tightened the rules around food supplied by a school in a bid to make children healthier, packed lunches brought in from home are not caught by the regulations.

However, schools are allowed to set their own policies regarding the types of food consumed on their premises during the school day and, provided that the policies implemented by the schools do not breach the school’s obligations under the Equality Act 2010 or any other relevant legislation, schools are free to determine what their pupils bring to school to eat during the day and, if their policies allow, to confiscate or challenge the inclusion of prohibited items within packed lunches.

This article was originally published in November 2017 in Salad Days (http://www.saladdaysmag.uk/).

To check if your child can get free school meals in England and apply to your local authority website – visit Gov.uk

Ideas for your child’s packed lunch:

NHS guidance – Healthier lunchbox recipes
BBC good food – School packed lunch inspiration

Use your will to save inheritance tax

Posted on 4 August 202220 March 2025 by Sophie Soraf

The question of how to structure your will is a complex one involving consideration of a range of different factors. Married couples with significant assets should consider the option of using an appropriate will trust on first death due to the tax planning opportunities available.

What is the inheritance tax nil rate band?

The inheritance tax “nil rate band” is the threshold below which no inheritance tax is payable. In recent years the nil rate band rules have become ever more complex with the introduction of three new elements alongside the standard nil rate band; they are:

transferable nil rate band
residence nil rate band
downsizing relief.

The complexity and quirks of the legislation offer many opportunities to save inheritance tax through (amongst other things) an appropriately structured will.

Please note: references to spouses and married couples include civil partners and it’s assumed that all the persons in the examples are UK domiciled. Depending on your circumstances there may be other tax and/or legal issues to consider so it’s always important to take advice.

Married couples where one or both of the couple have previously been widowed

Married couples where one or both of the couple have previously been widowed may be able to save significant inheritance tax by maximising their ability to transfer the unused nil rate bands of their late spouses (known as the “transferable nil rate band”).

Example 1:

Bob and Mavis, a married couple, have both previously been widowed. Bob’s late wife, Gill, died in 2008 and Mavis’s late husband, Jim, died in 2009. Both Gill and Jim left their estates to their respective surviving spouses.

Bob and Mavis each have assets worth £650,000 (which they own separately). Unusually, they do not own and have never owned their own homes (so residence nil rate band does not apply to them, more on which below).

They would like the survivor of them to inherit the assets of the first to die and on the second death for the total estate to be divided equally between Bob’s son and Mavis’ daughter. In the circumstances the full standard nil rate band applies to both of them and to their late spouses’ estates.

Bob dies in 2019 and leaves his entire estate to Mavis. Mavis dies in 2021, leaving everything to her daughter and Bob’s son in equal shares. For simplicity, assume no changes in asset values between their deaths.

The inheritance tax position: On Bob’s death there will be no liability for inheritance tax because of the spouse exemption. On Mavis’ death her executors will be able to use her nil rate band (£325,000) and claim a transferable nil rate band (also £325,000). However, even though she has now been widowed twice, she can only claim one transferable nil rate band.

Therefore, the inheritance tax liability on Mavis’ death will be £1.3 million – £650,000 x 40% = £260,000.

Example 2:

The facts are the same as in Example 1, except that Bob and Mavis make wills leaving the available nil rate band of the first to die and any transferable nil rate band from that person’s late spouse to a nil rate band discretionary trust.

On Bob’s death his entire estate (£650,000) will pass to the nil rate band trust. Mavis is included as a beneficiary of the trust so can benefit from funds if required at the discretion of the trustees. There is no inheritance tax liability on Bob’s death because of the nil rate band and transferable nil rate band available to his estate (his own nil rate band and the transferable nil rate band from his late wife, Gill.)

On Mavis’s death her estate of £650,000 will also be free from inheritance tax because her executors can claim her own nil rate band and the transferable nil rate band from her late husband, Jim. Hence there would be no inheritance tax on the death of either Bob or Mavis.

Mavis’s estate is left to the two children and the trustees of the discretionary trust could then decide to wind up that trust and appoint the assets to the two children.

Please note: There would be a small inheritance tax charge on the discretionary trust, which will vary depending on how long the trust runs for. In the example, if the trust was wound up shortly after Mavis’s death this charge would be approximately £4000. This would still mean an overall inheritance tax saving of approximately £256,000!

It should also be noted that this approach could have saved significant tax even if only one of them had previously been widowed (whichever one of them died first).

It is also the case that there are other reasons why the first of them to die might want to leave some or all of their assets to some form of will trust, e.g. to protect the intended inheritance of their own child. These issues are not considered here for simplicity but you can contact us to discuss any of these issues.

Standard nil rate band has been frozen until at least April 2026

The amount of the standard nil rate band has been frozen at its current level (£325,000) since 6 April 2009 and the government has announced that it will remain at that level until at least 5 April 2026.

Many married couples do not use the nil rate band on the death of the first of them to die, taking advantage of the transferable nil rate band. However, the freezing of the nil rate band means that the benefit of the transferable nil rate band can often be eroded by inflation. A nil rate band trust can avoid this erosion so could save tax on second death (assuming the nil rate band does not increase significantly in future).

Example 3:

Tony dies in 2021 leaving his entire estate to his wife, Georgina. This includes an investment portfolio worth £325,000 (which Tony was advised had strong growth potential). Neither of them has previously been widowed and their full nil rate bands of £325,000 are available.

Georgina dies in 2025 leaving a chargeable estate of £1.5 million, which is inherited by their children. This includes the investment portfolio she inherited from Tony, which is now worth £425,000.

While the investment portfolio has grown by £100,000 since Tony’s death (and so will increase the inheritance tax charge on Georgina’s death), the nil rate band remains unchanged.

Example 4:

The facts are as per Example 3 except that Tony leaves a nil rate band discretionary trust in his will. After his death the decision is taken to fund the trust by transferring the investment portfolio to it. Under the terms of the trust, Georgina can benefit if required at the discretion of the trustees. The portfolio is left in the trust.

The £100,000 growth on the investment portfolio is now held in the trust and is outside of Georgina’s estate for inheritance tax. This will achieve an inheritance tax saving of £40,000 compare to example 3. There would be some capital gains tax issues to consider.

Clawback rules

In 2017 the Government introduced an additional nil rate band for people who leave an interest in their home to certain qualifying beneficiaries (including children). This is known as the residence nil rate band. The rules for residence nil rate band are very complex so specialist advice should always be taken.

One point to note is that the residence nil rate band starts to be clawed back once your estate exceeds £2 million. The clawback rules are very complicated, but will eliminate residence nil rate band altogether, once the estate reaches a maximum of £2.7 million (depending on your circumstances, residence nil rate band could be eliminated before that level). Assets that qualify for business property relief or agricultural property relief are included when working out whether clawback applies.

Some married couples can reduce or even eliminate the impact of the clawback by using a nil rate band discretionary trust.

Example 5:

Martha and Henry are married and have a combined estate of £2.7 million, divided equally between them. Neither of them has previously been widowed and both have their full nil rate band of £325,000 available. Their estate includes their home worth £900,000. On Marta’s death in 2018 she leaves her entire estate to Henry. Henry dies in 2021, leaving his estate to their two children.

Because Henry’s estate (including the assets inherited from Martha) is at the maximum clawback threshold, no residence nil rate band applies.

Example 6:

The facts are the same as example 5 except that Marta leaves her available nil rate band to a discretionary trust. Henry’s estate is now worth £2.375 million, meaning that only a partial clawback of the residence nil rate band applies. Henry’s executors will be able to claim a residence nil rate band of £187,500, saving inheritance tax of £75,000.

Please note: The impact of the residence nil rate band clawback rules will become more widely felt over the next few years following the government’s decision to freeze the clawback threshold at £2 million until at least 6 April 2026. Many estates will become subject to a full or partial reduction in the residence nil rate band assuming asset values rise in the interim. Again, a nil rate band discretionary trust can mitigate this in appropriate circumstances by keeping down the value of the survivor’s estate.

Downsizing relief

Residence nil rate band may not be available (or fully available) where you sell your home. A common example is where elderly clients sell their home and leave the property market altogether or downsize late in life to funds care needs.

Where you sell your home or downsize on or after 8 July 2015, there is an alternative relief called downsizing relief which may be available instead of or alongside any remaining residence nil rate band. However, the rules for this are extremely complex and you should take advice to make sure it will be available. The £2million clawback threshold mentioned above, also applies to any downsizing relief so, again, there are opportunities to reduce or eliminate the impact of clawback in appropriate cases.

Impact of equity release on nil rate band

Decisions about equity release or other borrowing secured on your home can impact on the amount of residence nil rate band available. It’s important to take both legal and wealth management advice when making decisions about your home, where your estate is or may be subject to inheritance tax.

Will trusts can help you protect your loved ones

Posted on 2 August 202220 March 2025 by Sophie Soraf

Trusts often get bad press, being portrayed by some as vehicles to help the super-rich to avoid tax. While trusts can legitimately save tax for many people (most of whom are not super-rich!) their purpose is often to protect the position of loved ones.

Making a will involves consideration of many different factors and you should always consider, not only who you would like to benefit but how they should benefit. While the simplicity of outright giving will be appropriate in some circumstances, there are situations in which it may be more appropriate to protect the beneficiaries with some form of will trust.

What is a will trust?

A will trust can be thought of as a gift ‘with rules attached’. If you leave your assets to someone absolutely, you give total benefit and control of the assets given to them. They will own the assets and have the right to do with them as they wish. In contrast, where you leave assets to a will trust, you transfer ownership to trustees, who are charged with managing the assets for the benefit of beneficiaries. The will sets out who the trustees and beneficiaries are and the rules the trustees have to follow.

Some will trusts can be very simple, for example, if you leave assets to your trustees to hold for the benefit of your child when they reach age 18. It’s also possible to create more flexible trusts that give trustees discretion to decide who should benefit from capital or income and when that should be. You can also give different beneficiaries different rights, for example giving one person the right to benefit from the income generated by an asset, or to occupy a property for a set period, and giving other beneficiaries the benefit of the asset at the end of that period.

When you die, you give away all the assets in your estate under the terms of your will (assuming you make one, which you should!). For many people, this involves a significant transfer of wealth. It’s a good idea to consider whether you’re comfortable transferring that wealth absolutely or if you would prefer to use a trust.

Who are the trustees and what do they do?

The role of a trustee is to manage the assets in the trust and to exercise any discretions they are given. Depending on the wording of the trust, beneficiaries can act as trustees. You could also appoint outsiders such as trusted family members or friends or professional trustees.

The role of trustee is very important, and (as the name suggests) you should certainly choose people you trust! It is always sensible to take professional advice on the options and the factors to consider when deciding who to appoint.

You choose the initial trustees of a will trust under the terms of your will. You can either appoint the executors named in your will or separate trustees.

How does a will trust protect my family?

There are many different forms of will trust for different purposes. The protections offered and tax consequences will depend on the type of will trust chosen and you should always take professional advice on the different options.

Here are some of the many situations where an appropriately worded ill trust can protect your beneficiaries:

Where there is more than one family

If you, or your partner, have been married before or have children from a previous relationship, you might be concerned to ensure that your assets ultimately pass to your own children or family, while also looking after your spouse, if they survive you. A will trust can help to achieve this.

Where the surviving spouse may remarry or form a new relationship

Many people worry that if they leave their assets to their surviving spouse, their children may not inherit if the survivor remarries or forms a new relationship. Even if the survivor does not give away or leave the assets to their new partner, problems can still arise. For example, the new spouse might have a claim on assets if the new marriage ends in divorce, or they might make a claim for financial provision from the estate of the surviving spouse. Again, a will trust can reduce the risk of such problems.

Where the intended beneficiaries may be at financial risk

There are many situations where wealth left to a beneficiary may not end up going where intended, or may do them more harm than good, for example:

where the beneficiary is getting divorced or going through marital difficulties, there’s a risk that the inheritance may be included or taken into account in any divorce settlement.
where the beneficiary (or their partner) is immature, reckless, bad with money or at higher than usual risk of bankruptcy (for instance if they are engaged in risky business enterprises).
For young or otherwise vulnerable beneficiaries.

A will trust can reduce the risk of such problems arising.

Where an inheritance might affect the beneficiaries’ means tested benefits

Will trusts can often prevent the loss of a beneficiary’s means tested benefits, or reduce the impact of the inheritance on the benefits available.

Where an inheritance might complicate the beneficiaries’ tax position

An outright inheritance might complicate the beneficiary’s tax affairs if, for instance, they pay income tax at a high rate or their estate will be liable to inheritance tax on their death. While this is a complex area, the flexibility of will trusts can alleviate such problems, giving scope for some of the wealth to be used in a more tax efficient manner. For example, a child with significant wealth might prefer some of the trust funds to be used for their own children instead of them. A will trust can give the flexibility to focus the estate in the most tax efficient manner, depending on the circumstances at the time.

Where substantial wealth is involved

Substantial wealth (particularly when acquired suddenly) can cause its own problems. For example, it can affect a beneficiary’s outlook on life or the attitudes of those around them or increase their tax exposure. So it’s sensible to consider using a trust when passing down substantial wealth, even where the beneficiaries do not otherwise seem in need of protection.

How are will trusts taxed?

There are important tax issues to consider with will trusts including capital gains tax and income tax. The rules are extremely complex so it’s vital that you get specialist tax advice.

Will trust case studies

We’ve set out a couple of illustrative case studies of situations where a will trust might be useful.

Will trust case study 1

Gill, aged 70, has an estate worth £800,000 including her home (which is in her sole name), which she occupies with her second husband, Brian. She has two adult children (Simon and) Beth) from her first marriage, which ended in divorce. Brian does not have significant assets and is largely dependent on Gill. Brian also has two children from a previous relationship.

Gill would like to look after Brian if he survives her, but also wants to make sure that her assets pass to her children, after his death.

If Gill leaves the assets outright to Brian, then he will decide what to do with them during the rest of his lifetime and who to leave them to after his death. If Gill is uncomfortable with this, then she could use a will trust to control what happens to her estate after her death.

Will trust case study 2

Jake is a widower with an estate worth approximately £ 5 million. He wants to provide for his three adult children, Karen, John and Steven and their children after his death. However, he knows that Karen’s marriage is in difficulty and Steven has had money problems in the past. John has a significant wealth of his own and has mentioned that a large inheritance might cause tax problems.

Again, a will trust could be used to protect the shares of Karen and Steven and give flexibility for John’s children to receive some of the trust fund instead of John, if this is more tax efficient.

Use your will to protect your business from inheritance tax

Posted on 2 August 202220 March 2025 by Sophie Soraf

People with assets that qualify for business property relief or agricultural property relief can often save significant amounts of inheritance tax through appropriately structured wills.

Business property relief and agricultural property relief provide valuable relief from inheritance tax for qualifying assets. In some circumstances only one of the reliefs applies, in others they can apply in tandem. What is less well known is that, where relief applies, the structure of your will can make a significant difference to the total relief available and the inheritance tax liability on your death.

What is business property relief?

Business property relief provides relief from inheritance tax for “relevant business property”. Depending on the circumstances, the entire value of the relevant business property may be shielded from inheritance tax or the rate of relief may be lower. The criteria for business property relief are very complex. You will need to take professional advice on whether you qualify and how best to structure your interests so as to maximise the available reliefs.

What is agricultural property relief?

Agricultural property relief provides tax relief for “agricultural property”. The conditions for relief are different to business property relief, but again it can either shield the entire value from inheritance tax or a lesser value. Again, the conditions for relief are very complex and you should take professional advice.

Clients with relievable assets such as a business or a farm, also need to consider the risk of the reliefs being withdrawn or curtailed in the future if there is a change in the law or in their circumstances. The current business property relief and agricultural property relief regime is relatively generous compared with the recent past. It cannot be assumed that the reliefs will always remain in their present form.

Discretionary Will Trust to maximise reliefs

An appropriately structured will can help protect reliefs, as well as opening up opportunities to maximise the available reliefs. For example, clients with relievable assets may be able to protect the reliefs by leaving those assets to a discretionary will trust. These will often be particularly useful for married clients because any assets they leave to their spouse will be fully protected from inheritance tax anyway, due to the spouse exemption. This assumes the spouse is UK domiciled: the rules are more complex for non UK-domiciled clients. This means the other available reliefs on assets they leave to their spouse will effectively be wasted. The trust avoids this, as well as opening up opportunities for ongoing inheritance tax planning.

A discretionary will trust is an arrangement whereby trustees are appointed with discretion to decide who, from the specified class of beneficiaries, should benefit and when. The surviving spouse can be included in the class of beneficiaries and can also act as one of the trustees. Hence the spouse can still benefit from the assets if required at the discretion of the trustees, but the assets are kept outside of their estate for inheritance tax. Depending on the circumstances, there may be inheritance tax charges within the trust, however these will generally be much lower than the equivalent charges that would arise, if the assets were in the estate of the surviving spouse.

The examples below show some of the situations in which significant inheritance tax can be saved. Please note: references to married couples include civil partners. It is assumed that all clients in the examples are UK domiciled. For non-UK domiciles there are some additional issues to consider. The article considers will planning, however there are also lifetime planning issues that clients should consider with a specialist adviser.

Preserving reliefs

Using a discretionary will trust on the death of the first spouse to die, can prevent valuable reliefs from being lost, if there is a subsequent change in circumstances, before the death of the survivor, for example, if the eligibility rules for the reliefs change or if the relievable assets are sold.

Preserving reliefs – example 1: Margery and her husband, Jake, ran a successful furniture business, which they owned in equal shares. Neither of them made any lifetime gifts. On Margery’s death in 2012, she left all her shares in the business (then worth £1 million and which would qualify for 100% business property relief) to Jake. Shortly after Margery’s death, Jake decides to sell the business and retire. By the time of Jake’s death in 2021, the shares he inherited from Margery are held in an investment portfolio and are worth £1.5 million. His other assets exceed all the available inheritance tax nil rate bands, and he leaves everything to their children, Ben and Nigel.

The investment portfolio increases the inheritance tax exposure on Jake’s death by 40% of £1.5 million = £600,000.

Preserving reliefs – example 2: The facts are the same as in example 1 except that Margery leaves her shares in the business to a discretionary will trust and appoints Jake, Ben and Nigel as trustees. Shortly after Jake’s death, the surviving trustees (Ben and Nigel) decide to wind up the trust and appoint the trust fund (comprising the investment portfolio mentioned above) between themselves and their respective children: this appointment takes place later in 2021. There will now be no inheritance tax on the investment portfolio on Jake’s death. There would be a much lower inheritance tax charge on the trust when it is wound up and some capital gains tax issues to consider. However, a very considerable tax saving would have been achieved.

Maximising relief on your home

The residence nil rate band is an additional relief from inheritance tax where the home is left to qualifying beneficiaries. However, this relief starts to be reduced when your estate exceeds £2 million and assets qualifying for business property relief and agricultural property relief are included in working out whether this reduction applies. For some clients, using an appropriately worded trust on the first death can reduce or even eliminate this clawback.

Maximising relief on your home – example 3: Richard owns shares in a limited company business worth £2 million, the entire value of which qualifies for business property relief and other assets worth £800,000. His wife Clare is retired and has an estate worth £400,000, none of which qualifies for either business property relief or agricultural property relief. The estate values above include their home worth £600,000, which they own in equal shares. Neither of them has made any lifetime gifts.

On Richard’s death in 2016 he leaves all his assets to Clare. Clare dies in 2021 and still owns the business shares (which still qualify for business property relief). Clare’s estate is above the threshold at which the residence nil rate band is reduced to zero, so this will not be available to her executors.

Maximising relief on your home – example 4: The facts are the same as example 3 except that Richard leaves the shares to a discretionary will trust and the rest of his estate to Clare. The shares remain in the will trust at her death.

Clare’s estate (including the assets inherited from Richard) is now worth £1.5 million (assuming growth of £300,000 in the period between Richard and Clare’s deaths). As this is below the £2million clawback threshold, Clare’s executors will be able to claim residence nil rate band (including a transferable residence nil rate band from Richard’s estate). The total residence nil rate band will be £350,000, saving inheritance tax of £140,000!

Further tax planning opportunities after the death of first spouse

Using an appropriate will structure on the first death, can create opportunities for further inheritance tax planning after the death of the first spouse, in appropriate circumstances.

Example 5: Paul and Jenny are married and in a farming partnership along with their daughter, Gill. Their combined estate (which is divided evenly between them) is worth approx. £7 million and comprises their partnership share (worth £4 million), which attracts 100% business property relief and agricultural property relief and other non-relievable assets worth £3 million.

Paul dies in 2015 and leaves his entire estate to Jenny. Jenny dies in 2021 and leaves the farm to Gill and the non-farming assets to their other daughter Karen. For ease of reference assume no change in asset values between Paul and Jenny’s deaths. Neither of them has made any lifetime gifts. The inheritance tax liability on Jenny’s death will be approximately £940,000.

Example 6: The facts are the same as example 5 except that Paul leaves his assets qualifying for business property relief and agricultural property relief to a discretionary will trust and the rest of his assets on a life interest trust, under which Jenny has a right to the income.

This will structure opens up the possibility of making further use of the business property relief and agricultural property relief available to Paul’s estate. For example, the trustees of the life interest trust might agree with the trustees of the discretionary trust to purchase some of the assets qualifying for business reliefs. This would have potential capital gains tax and stamp duty consequences which would need to be considered.

Assume for the example that, shortly after Paul’s death, the discretionary will trust acquired assets attracting business property relief and agricultural property relief from the life interest trust totalling £1million, in exchange for non-relievable assets of the same value. Effectively the business property relief and agricultural property relief on these assets would then be used twice (on Paul’s death and again on Jenny’s death, providing Jenny survives the exchange of assets by at least two years). This would reduce the inheritance tax liability on Jenny’s death to approximately £540,000 saving approximately £400,000.

Complex tax and legal issues

Trusts are themselves potentially subject to inheritance tax charges at ten yearly intervals and on winding up. There would also be capital gains tax and stamp duty consequences of some of the actions above, which would need to be considered in advance. These would need to be balanced against the tax savings, although in many circumstances they will be much lower than the tax savings achieved. There are also income tax issues to consider. You also need to be comfortable giving the trustees’ discretion about what to do, rather than leaving assets to the intended beneficiaries outright and for this reason your choice of trustees is very important. This is a complex area of law and expert legal and tax advice should always be sought. However, significant tax savings can be achieved in the right circumstances.

Divorce financial settlements: Your comprehensive guide

Posted on 18 July 202222 March 2025 by Sarah O'Sullivan

Navigating the financial aspects of a divorce can be overwhelming. One of the most important steps is reaching a fair financial settlement, ensuring both parties can move forward independently. While every divorce is unique, this guide outlines how settlements are typically decided, the factors that influence them, and how you can protect your financial future.

What is a divorce financial settlement?

A divorce financial settlement is an agreement between you and your spouse on how to divide your assets, debts, and finances after separation. Once approved by a court through a consent order, it becomes legally binding, preventing future claims.

How to achieve a fair financial dettlement

Step 1: List and value your assets

Create a comprehensive list of all your assets and debts. This may include:

Property: Family homes, rental properties, and vacation homes
Savings and investments: Bank accounts, pensions, stocks, and shares
Personal belongings: Vehicles, jewelry, and artwork
Business interests: Companies, partnerships, or self-employment assets
Debts: Mortgages, loans, credit card balances

Step 2: Consider mediation or legal assistance

For amicable divorces, mediation can help you negotiate directly. For more complex cases, hiring an experienced divorce solicitor can ensure your interests are protected. Courts are typically a last resort when agreements cannot be reached.

Factors influencing asset division

Courts aim for a fair division of assets, but this does not always mean a 50/50 split. Key factors include:

Children’s needs: The welfare of any children is a top priority.
Length of marriage: Longer marriages often lead to more equal divisions.
Income and earning capacity: Future earning potential may be considered.
Health and age: Medical conditions may influence financial support needs.
Standard of living: Courts may seek to maintain a similar standard of living.

Understanding matrimonial vs. non-matrimonial assets

Matrimonial assets: Acquired during the marriage or through joint efforts (e.g., family homes, pensions, joint savings).
Non-matrimonial assets: Usually acquired before or after marriage or through inheritance. These may be excluded from the settlement unless required to meet needs.

Addressing common questions

1.Will my partner receive half of my assets?

Not necessarily. Courts aim for fairness, which may involve unequal divisions depending on needs, contributions, and other circumstances.

2.What happens to my pension?

Pensions are often included in settlements through a Pension Sharing Order, giving one spouse a percentage of the other’s pension.

3. Who is responsible for debts?

Debts incurred during the marriage are generally shared. However, personal debts may remain the responsibility of the individual.

4. What if my partner hides assets?

If asset concealment is suspected, courts can investigate and impose penalties. A financial expert can assist in uncovering hidden funds.

5. Is my inheritance at risk?

Inheritances are often excluded from settlements, especially if received post-separation. However, they may be considered if needed to meet financial obligations.

Finalising your divorce settlement

Once you reach an agreement, a solicitor can draft a Consent Order to submit to the court for approval. This legally binding document ensures financial closure.

If agreement cannot be reached, the court will make a ruling based on the specific circumstances of your case.

Need expert legal support?

Navigating financial settlements can be complex. Seeking guidance from our experienced divorce solicitor can provide clarity and ensure your interests are protected. Contact us today for a confidential consultation.