Understanding Testamentary Capacity

The number of Wills being challenged over the past decade has risen consistently, and it is easy to see why.  The stakes are much higher given the increase in house prices, meaning that many peoples assets are now worth hundreds of thousands (if not millions) of pounds. Furthermore, the younger generation are struggling to get on the housing ladder, and are increasingly reliant and / or expecting to receive an inheritance to do so. At this point, you may be wondering what Will disputes have to do with testamentary capacity. The the answer is that if a Will is not entered into with full understanding, it may be challenged and be declared invalid. 

What is testamentary capacity, and how is it established?

The word ‘testamentary’, in this case, refers to the act of bequeathing through a Will.  ‘Capacity’ refers to the cognitive ability of the testator (the person making the Will) to enter into the Will in a way that they fully understand.  Hence if a Will is entered into by a person who lacks the mental capacity to comprehend the implications of what is being stated, this would be considered to be a lack of testamentary capacity and will likely render the Will invalid. 

If the last Will is declared invalid the estate will be administered under the terms of the previous Will (if one exists) or under the rules of intestacy. This is a formula sued to distribute an estate if there is no will.  

Solicitors and other legal practitioners specialising in Wills must check that they are satisfied someone has testamentary capacity when taking instructions for a Will for a client. By doing so, its validity is less likely to be challenged following death. 

The risk with online and DIY Wills is that, in addition to the lack of professional legal guidance to ensure the Will is drafted to reflect all of the necessary provisions and life scenarios for your situation, it will lack evidence that checks were undertaken to verify capacity.  A professional Wills Solicitor will go out of their way to secure the proof needed, including requesting contemporaneous medical opinion, asking a medical professional to witness the Will, and attaching any other proof of capacity to the Will.

There are two main tests used by the Courts to prove testamentary capacity:

Banks v Goodfellow Test (Case law test)

 This common law test relates to the case of Banks v Goodfellow (1870), which used the following criteria to test for the existence of testamentary capacity:

  • The testator must understand the nature of making a will and its effects.
  • The testator must understand the extent of the property of which they are disposing.
  • The testator must be able to understand and appreciate the claims to which they ought to give effect (i.e. who can bring a claim against the Will).
  • The testator must have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of his property by Will.

Despite being over 150 years old, the Banks v Goodfellow test has stood the test of time due to its clarity, the fact it is based on case law principles going back three centuries, and because it covers the elements necessary to establish an all-round understanding of what is being entered into.

The Mental Capacity Act 2005 (MCA 2005)

 The MCA statutory test uses five core principles to establish mental capacity, as follows:

  1. A presumption of capacity – everyone has the right to make his or her own decisions and must be assumed to have capacity unless proved otherwise
  2. The right for individuals to be supported to make their own decisions – people should be given the necessary assistance before it can be concluded they are unable to make their own decisions
  3. Individuals have the right to make what might be seen as eccentric or unwise decisions
  4. Best interests – anything done for or on behalf of people without capacity must be in their best interests; and
  5. Least restrictive intervention – anything done for or on behalf of people without capacity should be the least restrictive of their basic rights and freedoms.

The MCA 2005 test for capacity was not intended to replace the Banks v Goodfellow test; rather the intention was to allow judges to make their own decision as to which would be most applicable.  However, the High Court case of James v James and others [2018], confirmed that the Banks v Goodfellow test should be applied when assessing mental capacity in relation to making a Will.

Ensuring testamentary capacity for your Will

Establishing testamentary capacity at the time of Will creation will mitigate the potential for it to later challenged.  For solicitors, ensuring their client understands what they are entering into and providing supporting evidence where necessary is a paramount consideration.  By failing to undertake this key step, a well-drafted Will, with all elements considered, witnessed, and signed correctly, could be rendered useless via a challenge.  Don’t cut corners and allow your Will to be judged invalid due to concerns over capacity – your loved ones deserve certainty that your wishes were made with sound mind and judgment.

If you would like to discuss any of the above issues, please contact Ian Pearl, on 020 8349 5506 or by email

Please note that this blog is intended for information purposes only and does not constitute legal advice. 

Survey shows online sexual harassment increased during coronavirus lockdowns

Few people would argue that the Internet has shaped and transformed the 21st century.  From shopping to researching, healthcare to defence, the online world has changed almost every aspect of our lives; sometimes for the better, and occasionally for the worse. It has long been recognised that many school children are tormented by online bullies.  Home used to be a safe haven but thanks to the Internet, tormentors can pursue students at home.  And following the surge in homeworking, driven by the Coronavirus pandemic, a new study shows that those suffering from workplace sexual harassment are also now having to deal with such behaviour inside their own four walls.

A recent survey by the Rights of Women charity lays bare the extent of the online sexual harassment problem.  It shows:

  • “45% of women experiencing sexual harassment, reported experiencing the harassment remotely, i.e. sexual messages (e.g. email, texts, social media); cyber harassment (e.g. via Zoom, Teams, Slack etc); and sexual calls.
  • 42% of women experiencing sexual harassment at work have experienced some to all of the harassment online.
  • 23% of women who have experienced sexual harassment reported an increase or escalation whilst working from home, since the start of lockdown (23rd March 2020).”

Furthermore, 72% of women do not feel that their employer is doing enough to combat online sexual harassment.  A hospital worker spoke of her experience, stating:

“As the pandemic was declared, all attention was diverted in managing clinical pressures and needs as I work in a hospital. This meant an investigation was not started for months. In the meantime, I felt unprotected as there was no system in place to remove the harasser from the department whilst an investigation was pending. …There is no policy in this mammoth organisation that addresses sexual harassment.”

Deeba Syed, Senior Legal Officer, Rights of Women, said:

“These statistics echo what women have been telling us already, sexual harassment at work happens online as well as in-person. Although more women are working from home, online sexual harassment has increased and women continue to suffer sexual harassment despite the Covid-19 pandemic. Women working from home have seen their harassers take to Zoom, Microsoft Teams, social media, messages, and phone calls, to continue the torrent of abuse.”

For employers, protecting employees from online sexual harassment presents yet another challenge that must be addressed.  Failure to do so could result in expensive, stressful, and reputation damaging Employment Tribunal claims.

What are employers’ duties regarding workplace sexual harassment?

Sexual harassment is illegal under the Equality Act 2010.  Sexual harassment can arise where there is:

  • Unwanted conduct of a sexual nature that has the purpose or effect of violating the victim’s dignity or creating an intimidating, hostile, degrading, humiliating, or offensive environment for the victim.
  • Less favourable treatment – this may occur because of the victim’s rejection or submission to the conduct as described above.

Employers have a duty to prevent workplace sexual harassment not only at the workplace premises but also at work-related events such as Christmas parties and on social media.

To protect their employees and commercial reputations, employers must take ‘reasonable steps’ to prevent sexual harassment from occurring.  Doing so may also act as a defence should an employee bring a sexual harassment claim against them.  Examples of ‘reasonable steps’ include creating a well-drafted sexual harassment policy and ensuring that policy is well communicated throughout the business.  It is also important to have training in place to help managers spot signs of harassment (both in person and online) and appoint one or two people to act as a safe person to go to if an employee wants to talk about concerns regarding a colleague’s behaviour.  An alternative is to publicise details of an outside organisation that can provide a confidential person to talk to.

Talk to an Employment Solicitor regarding sexual harassment

In this age of #MeToo, employers must be vigilant in their anti-sexual harassment policies and procedures.  If you have received a complaint about online sexual harassment, speak to an experienced Employment Law Solicitor about the best way to manage the situation.  The initial steps you take in handling a sexual harassment claim can make a significant difference as to whether an Employment Tribunal claim is brought.

If you would like to discuss any of the above issues, please contact Susan Bernstein, Employment Partner on 020 8349 5480 or by email

New 95% Mortgage Scheme Launches

The new government-backed 95% mortgage scheme launched on 19 April 2021.  High street lenders including Lloyds, Santander, Barclays, HSBC, and NatWest have all signed up to the scheme.  OGR Stock Denton’s residential conveyancing team are highly respected panel members on all four aforementioned lenders.

With studies showing that 80% of renters are now actively saving for a deposit, the ability to borrow up to 95% of the value on a property will ensure more people realise their dream of owning their own home.

How does the 95% mortgage scheme work?

With rents rising every year, the challenge to getting a foot on the property ladder is saving the necessary deposit.  During the Coronavirus pandemic, 95% mortgages virtually disappeared, putting a further barrier between Generation Rent and their desire for homeownership.  At the most recent Conservative Party Conference Boris Johnson made a promise to tackle inequality in the housing market.  By providing a government-backed low deposit scheme for properties purchased for £600,000 or less, thousands more will be collecting keys from an estate agent between April and when the scheme closes in December 2021.

Susan Allen, CEO of Retail and Business Banking at Santander gave her backing to the scheme, stating:

“We know that raising a large deposit can often be challenging for potential home buyers, so we’re pleased to be part of the government’s Mortgage Guarantee Scheme offering a range of 95% mortgages to help both first-time buyers and home movers.

As one of the UK’s largest mortgage lenders we see how important homeownership is to our customers and we use our wide experience and expertise to support them throughout the home buying process.”

How OGR Stock Denton’s Conveyancing Lawyers can help you with the 95% government-backed mortgage scheme

 With years of experience in the residential property market, our Residential Conveyancing Solicitors will ensure your 95% mortgage application and property purchase transaction goes through smoothly.  You can be confident that we will apply for all the necessary property searches and carefully examine the title and explain any issues that may affect your future enjoyment of the property.  As a full-service law firm, we can also assist you with other legal issues relating to your new home, for example drafting a Will or a Pre or Post-Nuptial Agreement.

Reacting to the news that the 95% mortgage lending scheme has been launched, Michael Stock, who heads up our Property Department comments:

“The Government’s Mortgage Guarantee Scheme will provide the boost many prospective home-buyers need to get on the property ladder.  However, no property acquisition is without risk.  It is essential to have an experienced Conveyancing Solicitor examine the mortgage offer and the details of the property to ensure the risk of falling into negative equity is mitigated.  Most of our clients and their families remain with us long-term because they appreciate that we take the time to get to know them and trust that they will be swiftly notified regarding any concerns around their property purchases.”

Whether you are buying a pre-existing home or a new build, our North London based Property Lawyers will provide expert advice and ensure your interests are fully protected.

To make an appointment to discuss any aspect of residential property law please email or phone 020 8349 0321.

 

OGR Stock Denton successful in Road Traffic Accident (RTA) compensation claim for client

OGR Stock Denton has once again successfully acted for a Claimant in a Road Traffic Accident (RTA) compensation claim against a Highway Authority. The firm’s Personal Injury solicitors represented a motorcyclist whose vehicle slipped on a manhole cover. The accident resulted in the client suffering a broken knee and wrist. Sitting in the Central London County Court, Mr Recorder Stephen Jourdan QC complimented counsel on the “clarity and cogency” with which the case was presented and awarded the Claimant £66,000 plus interest and costs.

Lead Partner Stephen Silverman, who has over 30 years’ experience in personal injury and dispute resolution law, was disappointed that the local authority did not make an early admission of liability to allow the team to arrange interim payments to cover the cost of the client’s rehabilitation. 

Stephen commented:

“As we often deal with highly complex personal injury cases, not only do we focus on getting significant compensation, but aim to secure an early admission of liability so the client can undertake a rehabilitation programme as soon as possible. Our clients’ health and wellbeing are incredibly important to us. Our solicitors are well known, not only for actively pursuing compensation but also for caring deeply for clients and their families at a time when their lives have often been turned upside down.”

Regarding his most recent success, Stephen went on to say:

“The importance of this case is that it recognises the obligation of Highway Authorities to maintain all aspects of a highway, including manhole covers. In this case, despite regular inspections, Transport for London failed to identify that the manhole cover was worn and polished so as to present a reasonably foreseeable and real danger to road users.

As a result of our successful arguments and expert evidence at trial, our client was able to recover damages for his pain and suffering, as well as for financial loss, including cost of repairs to his motorcycle  and loss of earnings, enabling him to move on from this traumatic incident.”

Working with Stephen and his team was Barrister, Tom Bourne-Arton, who is stated in Chambers and Partners as being:

“….efficient and sensible.” “He is quick to grasp issues and very efficient in turning work around.”

Thanks to the formidable reputation of its Personal Injury Lawyers, OGR Stock Denton can instruct highly experienced and respected Counsel such as Mr Bourne-Arton as well as top medical and Road Traffic Accident experts. This ensures our Personal Injury team, who are also members of APIL, can build robust cases and do their best to establish liability and secure the highest compensation available for their clients.

To make an appointment to discuss any aspect of Personal Injury or Road Traffic Accident claims please send us an email or phone 020 8349 0321.

What To Consider When Looking For The Best Inheritance Tax Solicitors

For some people, it is hard to think about what will happen to their assets after they die. Others want to ensure that their legacy is passed on in the most efficient way so their heirs can benefit from what they have worked hard to accumulate during their lifetimes. Whichever camp you fall into, pertinent, up-to-date advice from an inheritance tax solicitor can be invaluable. Everyone needs to consider making a will to ensure their estate is dealt with smoothly and in accordance with their wishes after their demise. But if your estate looks set to be valued at over £325,000, you will especially benefit from guidance from inheritance solicitors.

Inheritance tax (commonly abbreviated to IHT) is the tax that’s payable after the death of an individual on the money, property, and possessions they leave behind – their estate. It’s based on the value of the estate at the time of death, but can also include gifts given by the individual in the seven years preceding their demise. The value of the estate is calculated after any outstanding debts and funeral expenses have been deducted.

At present, the IHT threshold is £325,000, though changes to the whole framework are imminent. Currently, there’s no tax payable on the first £325,000 – this is known as the nil-rate band or NRB. If you have a spouse or civil partner, then you can pass the entirety of your estate to them tax-free, and they then benefit from an increased IHT allowance of up to double (i.e., £650,000) on their own death.

But otherwise, any value of the estate over £325,000 is taxed at a rate of 40%. This is usually settled by the executor of your will, if you have one, or administrator of the estate if there’s no will in place.

Other considerations are many, but include the recent Transferable Main Residence Allowance (TMRA), which came into force in April 2017. This allows the deceased to pass on a property in which they have been living to descendants, raising the tax-free allowance to £500,000 in total (£1 million for those who are married or have civil partners).

Reducing Liabilities Through Inheritance Tax Planning

what services do inheritance tax solicitors offerOf course, no-one likes paying more tax than they have to, and this is often where consulting inheritance tax specialists in the UK can be beneficial. It’s important that you do this at an early stage if you think your estate will be liable for IHT.

The above description of IHT and associated matters is the briefest of summaries and only scratches the surface of the complex framework surrounding inheritance tax. The landscape is likely to change in the near future too, so it’s vital that you seek legal advice from qualified and experienced experts before taking any action yourself. HMRC imposes severe penalties on breaches of tax legislation and you or your heirs could end up in trouble if you inadvertently break the rules.

Inheritance tax planning solicitors will first gain an overview and more detailed information about your specific circumstances. They will then detail options for ways in which you can manage your affairs now and at the time of your death to limit tax liabilities and benefit your heirs as much as possible.

Among these will be consideration of making a will; of giving tax-free gifts; of making charitable donations; establishing a family trust; making specialist investments; taking out insurance to cover the costs of IHT; gifting property to children or a loved one, and more, all of which can be tailored to your own unique circumstances.

Expert Legal Advice From Specialists

As noted above, IHT can be a minefield and the costs of getting your affairs wrong can be huge in financial terms, not to mention costly in terms of the emotional distress on your heirs that can result from dealing with HMRC at an already difficult time.

However, the cost of an investment in sound legal advice at an early stage can be more than offset by the savings you’ll make in tax liabilities in the future.

Come to OGR Stock Denton, where we have been advising on legal matters for personal and business clients for over 50 years. Our consultants will assess your situation and offer the best legal advice for your circumstances, explaining everything simply and clearly without blinding you with legal jargon.

Remember, while a difficult subject to contemplate, the sooner you start putting your affairs in order, the easier it will be for your loved ones after your demise. Call 020 8349 0321 today to make an appointment to speak to one of our experienced inheritance solicitors.

FREQUENTLY ASKED QUESTIONS

Can solicitor’s fees be offset against inheritance tax?

which inheritance tax solicitors to hireLiabilities and debts incurred prior to the deceased’s demise, such as mortgages, credit card, and household bills, can be deducted from the chargeable estate, as can funeral expenses. However, other costs that have been incurred after death, like probate and fees for solicitors or death tax lawyer services cannot reduce the value of the estate for Inheritance Tax (IHT) purposes.

How much do solicitors charge for being executors of a will?

When sourcing a lawyer to act as executor of an estate, ask how they will charge for carrying out the service. Some charge an hourly rate, while others will base their fee on a percentage of the value of the estate, usually between 1% and 5%, plus VAT.

How do you calculate inheritance tax?

The threshold for IHT is £325,000. If your estate is worth less, it’s classed as being in the Nil Rate Band (NRB). You’ll typically pay 40% tax on any amount above £325,000, unless the entirety is left to a spouse or civil partner, or an exempt beneficiary like a registered charity. Inheritance tax solicitors can advise further.

What is the UK inheritance tax threshold?

At present, the inheritance tax (IHT) threshold is £325,000 per individual, but the government is planning some changes in 2021. Currently, if you have a spouse or civil partner, any unused NRB on the death of the first person can be transferred to the survivor, increasing the amount of NRB available to up to £650,000.

Will my children have to pay inheritance tax?

Your children pay inheritance tax at 40% on any amount you have left them above the £325,000 personal inheritance tax-free allowance. You can establish a trust before death to reduce the percentage paid to 20%, but if you die within seven years, an additional 20% is charged. The law is complex, so seek advice from a family tax planning attorney.

how can inheritance tax solicitors help youA Guide To Inheritance Tax

Inheritance tax is a highly complex area. Broadly speaking, only a small percentage of estates are large enough to attract IHT – those with a value of over £325,000. Assets that count towards this sum include money in a bank, property and land, jewellery, cars, shares, pay-outs from insurance policies, and jointly owned assets. If your estate falls below the £325,000 threshold; you leave everything above the threshold to your spouse or civil partner; or you leave everything above the threshold to a charity or other exempt beneficiary, then there is normally no tax to be paid.

The recently-introduced Residence Nil Rate Band, aka home allowance, may also apply. If your main home or a share of it is passed to children or grandchildren, that can increase the amount that can be passed down tax-free. Planning ahead with the help of inheritance tax solicitors in London can mitigate tax paid.

Overview Of Inheritance Tax

The deceased’s estate usually pays 40% inheritance tax on any amount held over £325,000. If you’re a beneficiary, you don’t generally have to pay tax on an inheritance unless the estate hasn’t or can’t do so. If you inherit assets, you may have to pay income tax in future years – on dividends from shares or on rental income from an inherited property, for instance.

If you later sell inherited assets like shares or property, you may have to pay Capital Gains Tax. Assets. And if the deceased gifted you money, property, or possessions within seven years of their death, you may have to pay IHT on that.

What An Inheritance Tax Solicitor Can Do For You

An IHT attorney can help ensure:

  • There’s no conflict between your heirs after your death.
  • Your will is legally valid before your death.
  • You have a chance to organise your affairs with the help and advice of a qualified solicitor, to ensure your beneficiaries gain most value from your life’s work and their inheritance.

Inheritance Tax is a highly complicated area and is constantly changing. It’s easy to fall foul of the complexities of the law and that can mean your heirs and dependants receive less than they might otherwise have done. Make an appointment with our team at OGR Stock Denton LLP for help, advice and assistance in planning what will happen to your assets after your death.

Uber loses in the Supreme Court – Uber BV v Aslam & Ors

Earlier this month, Uber, the largest player in the gig economy ran out of appeals in its long battle to retain the right to classify its drivers as self-employed rather than workers.  The Supreme Court dismissed Uber’s appeal, meaning thousands of drivers became entitled to minimum wage and holiday pay.

For employers, the decision has far-reaching consequences in cases where the relationship between the organisation and self-employed people may blur into the realms of ‘worker’.  To help you understand what the decision means for you, our Employment Law Solicitors in London have answered some of the most frequently asked questions related to the Supreme Court’s ruling.

What was the background to the decision?

In 2016, two former Uber drivers took the ride-hailing company to the Employment Tribunal arguing that they were workers and were therefore entitled to be paid the minimum wage and holiday pay.  Uber argued that all its drivers were self-employed.

The Employment Tribunal found in favour of the drivers.  Uber appealed to the Employment Appeal Tribunal and the Court of Appeal, both of whom upheld the decision in the first instance.

Why did the Supreme Court rule that Uber drivers were not self-employed?

The Supreme Court upheld the employment tribunal’s decision in Uber BV v Aslam & Ors, that Uber drivers are “workers” for the purposes of the rights mentioned above. It held that worker status was a question of statutory interpretation rather than contractual interpretation and therefore the written documentation between Uber and its drivers was not the correct starting point.  Instead, it was necessary to consider the purpose of the relevant legislation, which was to protect vulnerable individuals in a position of subordination and dependence in relation to another person who controls their work.  The greater the degree of control, the more likely the individual is a worker.

Delivering the unanimous decision, Lord Leggatt emphasised five aspects of the findings made by the Employment Tribunal which justified the Supreme Court’s conclusion that the drivers were working for and under contracts with Uber.

  1. Uber set the fare and drivers were not permitted to charge more, meaning that Uber dictated how much the drivers were paid.
  2. All drivers had to sign a contract and were not permitted to negotiate the terms.
  3. Once a driver had logged onto the Uber app, their right to turn down requests for rides was constrained by Uber.
  4. Uber exercised considerable control over how the drivers did their work; for example, passengers were encouraged to rate drivers on a scale of 1 to 5 and warnings were given for low scores. If the driver’s average score did not improve, Uber would end its relationship with them.
  5. Uber took active steps to prevent passengers from developing a relationship with its drivers beyond a particular ride.

Taking these factors together, it was clear that the services provided by the drivers were very tightly defined and controlled by Uber and that, accordingly, they were workers.

In addition, the Court held that the drivers’ working time under the Working Time Regulations was not limited to the time spent driving passengers to their destinations but started from the moment they logged in to the Uber app, within the territory in which they were licenced to operate, and were ready and willing to accept rides. 

Lord Leggatt concluded:

“Taking these factors together, it can be seen that the transportation service performed by drivers and offered to passengers through the Uber app is very tightly defined and controlled by Uber. Furthermore, it is designed and organised in such a way as to provide a standardised service to passengers in which drivers are perceived as substantially interchangeable and from which Uber, rather than individual drivers, obtains the benefit of customer loyalty and goodwill. From the drivers’ point of view, the same factors – in particular, the inability to offer a distinctive service or to set their own prices and Uber’s control over all aspects of their interaction with passengers – mean that they have little or no ability to improve their economic position through professional or entrepreneurial skill. In practice the only way in which they can increase their earnings is by working longer hours while constantly meeting Uber’s measures of performance.”

What is the difference between a worker, employee, and self-employed person?

The Supreme Court upheld that Uber drivers were ‘workers’ as opposed to ‘employees’.  A worker includes an individual who works under a contract, whether written or oral, whereby the individual undertakes to perform personally work for the other party to the contract, provided that the other party is not, in reality a client or customer of the individual.

An employee is defined under section 230(1) of the Employment Rights Act 1996, as a person who has entered into or works under a contract of employment.  The contract can be in writing or implied by the structure of the working relationship.

A self-employed person is someone who runs their own business and takes responsibility for its success.  An employer has no responsibility in terms of employment rights and, subject to any commercial contract which is negotiated by both parties, a self-employed person is in charge of how and when their work is undertaken.

In determining whether an individual is self-employed or a worker, the courts will look at the reality of the working relationship rather than the label that the parties may have stated in the contract between them.

What advice do employment lawyers say to take in light of the Uber decision?

This decision leaves Uber vulnerable to claims from its workers for up to two years’ back pay or £25,000 (whichever is larger) in an employment tribunal, or up to six years’ back pay in the county court. They will also be able to claim 5.6 weeks’ annual leave each year.  However, they will not have employee rights, such as a right to a statutory redundancy payment or protection from unfair dismissal.

Many linked cases have been stayed pending the outcome of this case in the Supreme Court and the floodgate may open for many more.  That said, the Court’s finding that the Uber drivers were workers was fact specific and it may be that a different decision could be reached on a different set of facts.

If you are unsure as to whether certain members of your team are employees, workers, or self-employed, speak to one of our Employment Law Solicitors in London who can quickly advise you.

To make an appointment to discuss employment law matters please email us or phone 020 8349 0321.

What The 2021 Budget Means For Homebuyers, Employers, and Investors?

On 3 March 2021, Chancellor Rishi Sunak delivered this year’s budget. A year ago, two weeks before the first Coronavirus lockdown, the Conservative Party was promising to spend enormous sums in order to ‘level up’ and reward the so called ‘red-wall’ voters. Then everything changed almost overnight, and most of the money set aside for infrastructure spending etc was diverted into saving the economy, people’s jobs, and the NHS. This year’s budget was about continuing to provide Coronavirus support and paying for the mountain of debt accrued in fighting the pandemic. However, given the circumstances the country (and the world) are in, there was some surprisingly good news from the Treasury.

Residential Property Solicitors in London can help more people buy their home

Those looking to purchase a home have been given a double-shot of good news. Not only is the Stamp Duty Land Tax (SDLT) holiday being extended to the end of June, first home buyers are also set to benefit from a government-backed low deposit mortgage scheme.

Stamp Duty Land Tax

Introduced in July 2020 to help the residential property market recover after it came to a virtual standstill in the first lockdown, the SDLT raised the tax-free threshold to £500,000. This meant most homebuyers have not had to pay SDLT when buying a new home, saving them thousands of pounds. There was concern that the property market would fall off a cliff-edge if the tax break was abruptly ended on 31 March, as many transactions would not have completed, leading to buyers pulling out of sales as they would not be able to afford to pay SDLT. Thankfully, the Chancellor announced that the tax-free threshold would remain until 30 June 2021. From 30 June to the end of September 2021, the nil rate band will be set at £250,000 – double its standard level.

Low-deposit mortgages

Low-deposit mortgages have essentially disappeared over the last 12 months (although the number of lenders offering them has been declining since the 2008 financial crisis). This has made it almost impossible for first-time buyers, especially in London and the South-East, to save enough for a minimum 10% deposit. The government has said it is determined to turn ‘generation rent’ into ‘generation buy’.

To help all home buyers (not just those trying to get on the property ladder), the Chancellor confirmed that:

“several of the country’s largest lenders including Lloyds, Natwest, Santander, Barclays, and HSBC will be offering these 95% mortgages from next month.”  

Buyers will pay just 5% deposits to buy homes worth up to £600,000. The government will offer lenders a guarantee to provide mortgages covering the remaining 95%.

Businesses can continue to benefit from the Furlough Scheme

For both employers and employees, the Budget announcement that the Government’s Job Retention Scheme is being extended until September will be welcome. 

Speaking in the Commons, Mr Sunak said:

“As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Mr Sunak told the Commons: “As businesses reopen, we’ll ask them to contribute alongside the taxpayer to the cost of paying their employees. Nothing will change until July when we will ask for a small contribution of just 10% and 20% in August and September.”

Despite this positive news, there is likely to be redundancies when the Furlough Scheme does come to an end. For employees, this may mean seeking employment law advice on Settlement Agreements and whether they have a claim for unfair dismissal. Employers may need to see an employment lawyer for advice on ensuring the strict statutory redundancy process is correctly followed.

Inheritance Tax Solicitors can advise on the best estate planning strategies

For some, the budget did not bring good news. Although the Chancellor did not raise Income Tax, National Insurance, or VAT, a freeze was put on Inheritance Tax, pension ‘lifetime allowances’, and the personal tax allowance thresholds. As wages and the value of assets increase over the next few years, more people will be subject to increased taxes.

To protect your wealth, tax planning is essential. An Estate and Inheritance Tax Planning Solicitor will carefully evaluate your investments and advise on actions to take to avoid paying more tax than is necessary. Because the government’s need to repay the deficit will become more pressing over the coming years, it is vital to get your tax planning in order immediately.

To make an appointment to discuss any aspect of residential property, employment, or tax planning law please send us an email or phone 020 83490321.

UK Stamp Duty Holiday set to be extended?

It has been widely reported that the Chancellor of the Exchequer, Rishi Sunak is likely to extend the Stamp Duty Land Tax (SDLT) holiday for a further three months.  This will occur when he presents his budget on 3rd March 2021.

With the looming threat of over 200,000 current residential property transactions collapsing when the SDLT holiday ends on 31 March 2021, estate agents, solicitors, mortgage lenders, as well as buyers and sellers welcome the news of a possible extension.

Residential property solicitors in London are urging people not to make any financial commitments on the back of the reports that the SDLT holiday will be extended.  One thing that the Coronavirus pandemic has taught us is that government promises and policies can swiftly change.

In this article, we explain what stamp duty is and why not extending the holiday poses a serious risk to the property market.

What is Stamp Duty?

If you buy land above a certain price threshold in England or Northern Ireland, either freehold or leasehold, you may have to pay SDLT.  Scotland and Wales have different but equivalent taxes.

What is the Stamp Duty holiday?

During the first lockdown in March 2020, the residential property market virtually ground to a halt.  To help it recover, Rishi Sunak introduced a SDLT holiday, waiving the tax on the first £500,000 of the property price. 

SDLT over the first £500,000 is calculated as follows:

Property Value Stamp Duty Rate
£500,001 to £925,000 5%
£925,001 to £1.5 million 10%
above £1.5 million 12%

The above applies to people who are purchasing a property that will be their only home.

If you are purchasing an additional home, the SDLT rates up until 31 March 2021 are as follows:

Property Value Stamp Duty Rate
Up to £500,000 Up to 3%
£500,001 to £925,000 8%
£925,001 to £1.5 million 13%
above £1.5 million 15%

 

Why are residential property lawyers and estate agents so concerned about the end of the SDLT holiday?

There is pressure on the Treasury to extend the SDLT holiday in some form to avoid a ‘cliff-edge’ situation of thousands of house sales falling through because buyers cannot afford to pay normal stamp duty.

The time for a sale and purchase transaction to complete has become significantly longer due to the sheer number of house purchases and the fact that many organisations and businesses involved in real estate transactions have had staff off either sick or self-isolating.

Obtaining property searches is one of the main reasons for delays.  In December 2020, around 8% of local authorities were reporting significant delays in returning searches with turnaround times for all of these local authorities exceeding 26 working days.

There have also been major delays in processing mortgage applications.

A stable property market is essential to the UK economy.  Residential property represents the largest proportion of most people’s consumer wealth.  The Bank of England puts it succinctly:

“The housing market is closely linked to consumer spending. When house prices go up, homeowners become better off and feel more confident. Some people will borrow more against the value of their home, either to spend on goods and services, renovate their house, supplement their pension, or pay off other debt.

When house prices go down, homeowners risk that their house will be worth less than their outstanding mortgage.  People are therefore more likely to cut down on spending and hold off from making personal investments.”

Will the stamp duty holiday be extended?

The government has given no assurances that the SDLT holiday will be extended.  And even if it is, it may not continue in its current form, as doing so would merely ‘kick the can down the road’, leaving the property market vulnerable to another ‘cliff-edge’ in June.

To mitigate the risk of the property market plummeting, the Treasury may extend the holiday only to those who have reached a certain stage in their residential property transaction, for example, agreeing with solicitors to exchange contracts.  Alternatively, the tax relief available may be tapered down between March and June.

Either of the above scenarios will result in transactions becoming more complicated, and therefore, the Chancellor may decide on a blanket extension to the existing relief, taking a chance that the vaccine programme and easing of lockdown will boost confidence enough to ensure the market stays buoyant throughout the summer.

We will update you as soon as a decision is made. In the meantime, if you are concerned about your current house sale or purchase or want advice on how to take advantage of the SDLT holiday, please get in touch with a member of our conveyancing team today.

To make an appointment to discuss any aspect of residential property law please email or call us on 020 8349 0321.

Redundancy advice for employees and employers

In this post we look at some of the common questions both employees and employers have been asking about redundancies:

When is a dismissal of an employee by reason of redundancy?

A dismissal is taken to be a dismissal by reason of redundancy where it is wholly or mainly attributable to:

  • a closure of the employer’s business as a whole (business closure);
  • a closure of the particular workplace where the employee was employed (workplace closure); or
  • a reduction in the size of the workforce because the requirements of the business for employees to carry out work of a particular kind, or to do so in the place where the employee was employed, have ceased or diminished or are expected to cease or diminish (diminished requirements).

When is collective redundancy consultation necessary?

If an employer is proposing to make 20 or more employees redundant at one establishment within a period of 90 days or less, it must consult on its proposal with appropriate representatives, such as a recognised trade union, or if none, with representatives elected by the affected employees and it must also notify BEIS.

The consultation should begin in good time and within minimum time limits:

  • Where the employer is proposing to dismiss 100 or more employees in a 90-day period, consultation must begin at least 45 days before the first dismissal takes effect.
  • Where the employer is proposing to dismiss between 20 and 99 employees in a 90-day period, consultation must begin at least 30 days before the first dismissal takes effect.

The maximum sanction for breaching the obligations is a protective award of up to 90 days’ gross actual pay for each affected employee, which can add up to a substantial amount.

Employers must not assume that collective consultation is an adequate substitute for individual consultation with affected employees.

What procedure does an employer need to follow in individual cases?

In dismissing employees for redundancy, employers should act fairly and reasonably in order to avoid claims for unfair dismissal.  Employers should do this by:

  • following any contractual redundancy procedures, express or implied, that may apply; and
  • following a fair procedure enabling the employer to make dismissal decisions that are fair and reasonable in the circumstances. In particular, an employer will normally not act reasonably (and a dismissal will therefore be unfair) if:
  1. there is no genuine redundancy situation; or
  2. the employer fails to consult the employee individually about the proposed redundancy; or
  3. the employee is unfairly selected because the employer fails to identify a fair pool from which to select the redundant employee or fails to choose reasonable selection criteria that can be objectively measured and are not discriminatory; or
  4. the employer fails to search for and, if it is available, give the employee an opportunity to apply for suitable alternative employment within its organisation.

The obligations with regard to an individual are distinct from the employer’s collective redundancy obligations. Accordingly, if there is a collective redundancy situation, there will still be a need for individual as well as collective consultation and the two processes will often run at the same time, although some aspects of the collective consultation should take place first.

An employee with at least two years’ continuous service is entitled to a statutory redundancy payment in addition to any contractual redundancy payment or other benefits that their employer may provide.

Can an employer make an employee on furlough redundant?

An employee can be made redundant whilst on furlough.  An employee’s redundancy rights will not be affected by being on furlough but an employer cannot claim reimbursement of redundancy payments or notice pay under the CRJS.  Notice pay will be at the employee’s normal rate of remuneration, not their furlough pay. 

Whether an employee would have a potentially successful claim for unfair dismissal if they were made redundant whilst on furlough or if they were made redundant instead of being furloughed would depend on the usual test of reasonableness, depending on the particular circumstances of the case, including the size and resources of the employer. Many workplaces have closed and jobs genuinely ceased to exist in this coronavirus pandemic. The fact that there may be a possibility that an employer may need employees in similar roles sometime in the future does not mean that an employer must continue to furlough employees. However, employers would be advised to consider furloughing as an alternative to redundancy and record in writing their reasons why furloughing or continuing to furlough would not be suitable in the particular circumstances of the case.

Redundancy or reorganisation exercise?

Where the employer carries out a reorganisation so that old roles disappear and are replaced by new roles, the question of whether this reorganisation is in fact a redundancy exercise is fact sensitive. As it was put by Burton P in Kingwell and others v Elizabeth Bradley Designs Ltd EAT/0661/02  “It is not an automatic consequence of there being a business reorganisation that there is a redundancy; nor is there a need for a business reorganisation in order that there should be a redundancy situation. The two are entirely self-standing concepts. But if a business reorganisation leads to a diminution in the requirement for employees carrying out the relevant work, then that business reorganisation leads to a redundancy situation and if not, not.” Given that these decisions are fact sensitive, they can be difficult to reconcile and can often cause uncertainty for employers.

If there is a reorganisation so that an old role disappears and is replaced by a new role, and the employee applies for the new role, the employer does not need to use objective criteria to assess the employee’s ability to perform in the new role, and can rely on their usual interview process to make a subjective assessment of who is the best person for the job as long as a fair process is followed and there is no indication of bias.

Can an employee still be made redundant if she is pregnant or on maternity leave?

Selection for redundancy due to pregnancy or maternity is automatically unfair and no minimum period of employment is required for an employee to make a claim. This is also likely to amount to sex discrimination.

That said, where a woman is made redundant while pregnant or on maternity leave, but not due to the fact that she is pregnant or on maternity leave, the normal test of fairness will apply.

A woman who is made redundant while on maternity leave must be offered a suitable available vacancy with her employer or an associated employer, however inconvenient for the employer.

The second reading of the Pregnancy and Maternity (Redundancy Protection) Bill 2019-21 is scheduled to take place on 12 March 2021.  This Bill aims to simplify current redundancy protections for pregnant women and women on maternity leave by making it automatically unfair for an employer to dismiss a woman by reason of redundancy if the dismissal occurs during pregnancy or maternity leave or the six month period after the end of the pregnancy or maternity leave, unless the employer’s business is closing down in the place where the woman worked or the work she is employed to do is ceasing and she has not been offered suitable alternative employment. Similar protections would also be available for women who experience a stillbirth or miscarriage.

If you would like to discuss any of the above issues, please contact Susan Bernstein, Employment Partner on 020 8349 5480 or by email

Bank of Mum and Dad – Top three things to consider

The plight of young people trying to get on the housing ladder is well known. The days of being able to borrow 100% of the property price disappeared in the fog of the 2008/9 financial crisis.  Furthermore, the cost of housing has risen dramatically, increasing by 1,145% since 1980 and predicted to rise a further 17% over the next decade. London residential property solicitors are seeing more young people funding first home purchases through the ‘Bank of Mum and Dad’. 

But before handing over a significant sum to your children so they can purchase a property there are several things to consider to prevent a bitter family dispute developing in the future. For example, your son or daughter may be buying a property with their cohabiting partner. If their relationship ends, you may find it difficult to recoup your money if the loan and property purchase has not been structured to protect your interests as a lender.

The top three things to consider when lending or borrowing from the ‘Bank of Mum and Dad’ are:

Ask your property Solicitor to structure the loan to ensure you are repaid

If you have decided to lend rather than gift house deposit money, your residential conveyancing Solicitor will advise that you draw up a loan agreement detailing how the loan is to be repaid. You can also put a legal charge over the property in the same way a bank would if it were providing a mortgage. This will give you the power to sell the property (as a last resort) if your son or daughter and their partner do not repay you, provided there is sufficient equity in the property at the time of sale.

You may also choose to have your name registered on the property’s title, which would give you more control.  You and your child and their partner/spouse can purchase the property as tenants in common, with you holding a proportionate share of the property related to the size of the loan.  For example, as tenants in common, your son or daughter could hold 40% of the property, their partner 40% and you 20%.

If you are gifting the deposit money, make sure you understand the tax implications

You may choose to gift your children money for house deposits with no expectation of repayment. Whilst this is a wonderful gesture, it can have significant consequences in terms of tax. Inheritance Tax is payable if your estate is worth £325,000 after your death. Married couples can ‘inherit’ each other’s tax-free allowance, raising the amount to £650,000.  And if you leave your family home to your direct descendants, you can benefit from the Residence Nil Rate Tax Band of £175,000. 

You can give away £3,000 per year tax-free.  However, given that the average bank of mum and dad loan/gift is £24,100, rising to £31,000 in London, it is crucial to invest in estate/tax planning advice so you can gift house deposit money without incurring Inheritance Tax at a later date. Our private client team can work closely with your accountant to also plan for second-home Capital Gains Tax if you choose to own part of your child’s property as a tenant in common.

Have your property law Solicitor explain the legal implications of being a guarantor or taking out a joint mortgage

If you do not have the money available to gift or loan part or all of your children’s house deposits, you could consider being a guarantor on their mortgage.  Although fewer banks allow for guarantors these days, a mortgage broker will undoubtedly be able to find a willing lender. If you choose to be a guarantor, you must have the lending agreement checked by an experienced Conveyancing lawyer and ensure they fully explain the small print relating to your obligations to repay the mortgage if your child defaults on their mortgage payments.

You can also take out a joint mortgage with your child and their spouse/partner.  This will result in you owning part of the property.  Some banks will insist that you are aged under 70 at the end of the mortgage term and others will only provide a joint mortgage for interest-only loans.

Want to know more?  Come to our live webinar on How Secure Is The Bank Of Mum And Dad?

The above is simply a brief overview of the legal considerations and implications of the ‘Bank of Mum and Dad’. There are many other considerations such as whether or not a lending parent may have an interest in the property under trust law, Consumer Credit Act issues should the relationship between the parents and their child or their child’s partner break down, and allegations of undue influence in the case of a future dispute developing.

On Tuesday, 2nd March 2021, London-based property Solicitors from OGR Stock Denton LLP will be presenting a live webinar discussing all these matters and more. For further information please visit our events page.