Legal Practice Notes

In recent years, there has been mounting pressure on the government to introduce further legislation on economic crime to deter criminals from laundering money in the UK. The conflict in Ukraine triggered the Economic Crime ( Transparency and Enforcement) Act 2022 ( EC( TE) A 2022), forming part of the UK government’s response. The government expedited the Bill’s passage through Parliament, with all stages completed in five Parliamentary sitting days. EC( TE) A 2022 is intended to stop the UK property market being used to store, hide or launder criminal proceeds and wealth, to improve transparency over the ultimate owners of properties and assets in the UK, and to make it simpler for enforcement bodies to dispossess owners of unlawfully obtained assets. This is supported by separate provisions that make it easier to designate persons and organisations under sanctions pursuant to the Sanctions and Anti- Money...

ARCHIVED : This Practice Note has been archived and is not maintained. A longstanding feature of the UK rules on employment income taxation has traditionally, over many years, been to grant certain tax advantages to employees who are UK resident but not UK domiciled, where they are able to organise their employment arrangements in a particular, structured manner. An individual who is both UK resident and UK domiciled for tax purposes is liable to UK tax on all worldwide income under UK domestic law. This holds irrespective of who employs them and where their employment duties are performed. By contrast, a UK-resident but non- UK-domiciled employee who claims the remittance basis for the tax year in question will be taxed on ‘chargeable overseas earnings’ for that year only to the extent those earnings are remitted to the UK. For background details on the meaning of...

The family home In many estates, the main residence represents a disproportionately large share of family wealth. This leads to several important issues: its value can, on its own, create a substantial IHT exposure and markedly increase the overall IHT burden there is a natural wish for the property to remain with a surviving spouse or with one or more children As the home’s value often results in an IHT charge, even where two nil rate bands are available, earlier years saw legal and tax practitioners devise arrangements to exploit gaps in tax law. HM Revenue and Customs have repeatedly countered these by introducing anti-avoidance rules to block such planning. Examples include the anti- Eversden provisions inserted by the Finance Act 2006 into section 102(5A)-(5C) of the Finance Act 1986 ( FA 1986) following the House of Lords decision in IRC v Eversden, and the anti- Ingram rules...

The nature of a marriage trust A marriage trust is a settlement created in contemplation of marriage, established either: before the marriage takes place after the marriage where it gives effect to a pre-nuptial agreement made to settle When to consider using a marriage trust Marriage has long been a moment for creating a trust. These matters are often agreed. Usually, the couple first agree what should be settled before asking their advisers. Nowadays, it is common for only one party to settle the property......

This Practice Note outlines the terms typically found in a partnership agreement for partnerships established under the Partnership Act 1890. It provides an overview of the statutory default rules that operate where no agreement exists, alongside the clauses commonly adopted in a partnership agreement. Partners are, in almost every case, advised to put a partnership agreement in place, so as to prevent the application of unsuitable default rules under the Partnership Act 1890 ( PA 1890), or to augment the statute where it does not go far enough. The PA 1890 expressly contemplates that all partners may, by unanimous consent, vary their statutory rights and obligations......

Double tax treaties ( DTTs) Double tax treaties ( DTTs) set out how taxing rights are shared between jurisdictions, with the principal aim of ensuring that taxpayers do not face tax on the same income twice in different states, an outcome that would otherwise discourage cross-border economic activity. These instruments are hybrid in nature—both international agreements and, simultaneously, part of the tax law of each state. The consensus is that they operate solely to relieve taxation, and cannot create a greater liability than would arise under domestic legislation. Notably, Action 6 (one of the 15 core Actions) within the Organisation for Economic Co-operation and Development ( OECD)’s Base Erosion and Profit Shifting ( BEPS) Project targets treaty abuse, and is the subject matter of the OECD report titled Preventing the Granting of Treaty Benefits in Inappropriate Circumstances. There are two forms of double...

FORTHCOMING CHANGE relating to changes to APR and BPR : In the Autumn Budget 2024 on 30 October 2024, the government indicated plans to materially scale back APR and BPR on eligible property from April 2026. After consultation and subsequent updates, the 100% relief will be narrowed: it will no longer cover the full value of qualifying agricultural or business assets, and will instead be available only on the first £2.5m of combined value. See News Analysis: Autumn Budget 2024— Private Client analysis — Inheritance tax. FORTHCOMING CHANGE relating to IHT on pension death benefits : Also at the Autumn Budget 2024 on 30 October 2024, the government set out that, from 6 April 2027, unused pension funds and pension death benefits will be brought within a person’s estate for IHT. This measure will apply to both defined contribution and defined benefit schemes, and to UK...

Domicile of individuals Q& As For general material on domicile, see: Domicile of individuals—overview. While fresh Q& As are added to this Practice Note as they arise, the individual Q& As are not updated on an ongoing basis and reflect the law only as at the date shown for each entry. Changes in domicile status There are three categories of domicile: Domicile of origin Domicile of dependency Domicile of choice An individual’s domicile of origin endures for life. It may lie dormant if a domicile of dependency or of choice is later acquired, placing the origin in abeyance, but it cannot be erased altogether. Where a domicile of dependency or of choice ceases and no new domicile replaces it, the domicile of origin automatically reasserts itself. See Practice Note: Domicile for UK tax purposes before 6 April 2025 [...

Numerous issues about an individual’s personal status are determined by their personal law. The chief aim of identifying domicile is to locate that personal law by weighing links that tie the person to a jurisdiction with its own legal system. Every person must possess a domicile. It is not possible to be without domicile, nor to possess more than one at once. An individual’s domicile also regulates personal relations such as marriage, legitimacy and succession, and is thus central to estate planning. General principles of domicile In 1985, the Law Commission and the Scottish Law Commission undertook a joint review of the English and Scots laws on domicile and proposed certain statutory reforms ( Law Com No 168). Those proposals were never implemented. Even so, the report helps to summarise English legal principles, some of which are not clearly settled by the case...

This Practice Note has been archived and is not maintained. Before 6 April 2025, an individual’s liability exposure to UK inheritance tax ( IHT) on overseas situs assets turned on their domicile status. Domicile likewise played a pivotal role in deciding whether the remittance basis could apply to the taxation of a UK resident’s foreign (non‑ UK source) income and gains. See Practice Note: Introductory guide to residence and domicile for UK tax purposes before 6 April 2025 [ ARCHIVED]. For details on the ending of the remittance basis and the residence‑based IHT framework taking effect from 6 April 2025, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence‑based regime for IHT from 2025–26. In UK taxation, the meaning of domicile is taken from its ordinary sense and from case law, rather than being expressly...

In HL v United Kingdom (the Bournewood case), the European Court of Human Rights determined that, where a person with a mental disorder is cared for or treated in circumstances amounting to a deprivation of liberty, a procedure prescribed by law must be observed. Consequent upon that decision, the Mental Health Act 2007 ( MHA 2007) inserted a series of provisions into the Mental Capacity Act 2005 ( MCA 2005), which took effect on 1 April 2009. Notably, Schedule 1A to the MCA 2005 created what are now termed the Deprivation of Liberty Safeguards, or the DOLS regime. The powers conferred by the MHA 2007 upon the Court of Protection, together with the DOLS regime, were implemented to ensure suitable legal safeguards for incapacitated persons who are, or might be, deprived of their liberty outside the scheme of the Mental Health Act 1983 ( Me HA...

Total intestacy A total intestacy arises where none of the deceased’s estate is effectively disposed of because: no Will was made a Will was made but is invalid the Will was revoked the Will includes no disposition of the estate the Will, though valid, is ineffective, for example where the sole beneficiary died before the deceased Intestacy rules applicable on total intestacy If the deceased died intestate, Parts III and IV of the Administration of Estates Act 1925 ( AEA 1925) govern: all movable property of an intestate domiciled in England and Wales, wherever that property is located all immovable property situated in England or Wales, regardless of the deceased’s domicile The intestacy provisions apply to the residuary estate not otherwise disposed of, meaning what remains once all debts are settled and any valid legacies carried out. They operate only over...

For an interest in possession beneficiary, the trust works as a channel through which income flows, keeping its nature and tax treatment for tax purposes. Interest arrives gross; tax is settled by the trustees and appears as net interest for the life tenant in their hands. Likewise, dividends come in gross and the trustees pay the tax, unless the income is mandated directly to the life tenant. This ‘look‑through’ approach acknowledges that the beneficiary is entitled to income as it arises. By contrast, a discretionary beneficiary has no entitlement to the trust’s income until the trustees choose to distribute it. There is no prescribed mechanism to align a payment with income received by the trustees in any period. Therefore, the beneficiary cannot ‘look through’ the trust to the original source of that income. The same applies where the trustees simply hold a power to...

Advances in worldwide communications and mass media have produced concerted campaigns, for example through the Disaster Emergencies Committee ( DEC), to collect funds for people affected by natural and man-made catastrophes. The monies gathered are, for the most part, channelled via established charities that possess the infrastructure, contacts and expertise needed to deploy them well. The charities’ own aims, typically focused on relieving (and preventing) poverty and illness, are ordinarily sufficiently wide to include supplying the basic essentials for survival—such as rescue, food, medical care and shelter—that victims may need. A further development has emerged among international animal welfare organisations, able to draw on their existing resources for this purpose, to solicit donations to save and care for pets and wildlife caught up in a disaster whose needs might otherwise receive lower priority. Calamities can also strike closer to home, and an appeal for...

For overarching guidance on the special income tax and capital gains tax ( CGT) treatment of trusts for disabled persons, refer to Practice Note: Taxation of trusts for disabled persons—income tax and CGT. That Practice Note sets out how to make an election for the special income tax and CGT treatment. Reform Following HMRC’s consultations, notable updates have been made to the definition of a disabled person: The qualifying conditions have been broadened to include people in receipt of Personal Independence Payments for care or mobility at either rate, and to include those who receive the higher rate of the Disability Living Allowance mobility component. The previous anomaly that allowed a CGT-free uplift on the death of the disabled person for interest in possession trusts, but did not extend the same uplift to discretionary trusts, has now been corrected. Both...

STOP PRESS: The Property ( Digital Assets etc) Act 2025 obtained Royal Assent on 2 December 2025 and took effect immediately. Section 1 confirms that an item (including something of a digital or electronic character) is not barred from being the subject of personal property rights simply because it is neither a thing in possession nor a thing in action. Accordingly, digital holdings such as cryptocurrency, non-fungible tokens and carbon credits may now be treated as personal property. See LNB: 04/12/2025 2. This Practice Note is in the process of being revised to take account of this development. What are digital assets? Although there is presently no statutory definition of ‘digital assets’, the Law Commission’s final report, issued on 28 June 2023, offers crucial backing for the developing legal architecture for digital assets under English law. See News Analysis: A new frontier for digital...

This Practice Note sets out the main digital advertising and marketing routes, such as website advertising (banners and tile ads), search engine optimisation ( SEO), social media advertising, email advertising, mobile advertising, streaming advertising, digital out-of-home ( DOOH) and virtual out-of-home ( VOOH), virtual and augmented reality advertising, affiliate marketing, and content and native advertising. It also flags the core regulatory and legislative frameworks, together with the outcomes of non-compliance. Digital, online and social media (together termed ‘digital’) cover a wide and continually expanding range of channels for delivering promotional materials. Each option carries particular benefits and drawbacks when it comes to managing legal risk. Digital technology can aid compliance by permitting closer control of campaigns than traditional media. However, this is a rapidly evolving field, with innovation frequently stretching the limits of current legislation. For fuller guidance on the topics...

Deputies appointed in respect of a protected party’s ( P’s) property and affairs are regularly engaged in setting up a care regime. While a property and affairs deputy does not hold the power or, in many cases, the specialist knowledge to make care and welfare decisions for P, they still have a direct role in issues relating to P’s care. According to the type and extent of P’s disabilities, the deputy may organise and fund a spectrum of care packages, from complex arrangements to modest levels of support. A round-the-clock professional nursing package delivered by a sizeable team of carers A single support worker assisting P with specific tasks for a few hours each week The terms ‘carer’ and ‘support worker’ are used throughout these notes; however, whichever service the deputy commissions, the same issues must be considered and then dealt with. The...

Meaning of children, issue and descendants in drafting Wills and trusts Children The meaning of expressions used in Private Client drafting and legislation to denote children can shift with context. This Practice Note explains the sense in which such references commonly arise in Private Client work. As a rule, ‘children’ signifies the immediate legitimate descendants, and excludes grandchildren and more remote descendants. It will at least encompass all children born before the testator’s death ( Goodwyn v Goodwyn (1748) 1 Ves. Sen. 226 (not reported by Lexis Nexis®)). For dispositions made on or after 1 January 1970, illegitimate children are, on the face of it, included; for those made earlier, they are excluded. See the ‘ Illegitimacy’ section below. Subject to context and admissible evidence, the term may extend to other generations (potentially the whole line) of...

The simplest defence available to a trustee confronted with a breach of trust allegation is that the claim is baseless, for instance that no breach occurred, or that a breach occurred but no loss followed. Likewise, the claimant might fail entirely to prove any causal link between the alleged breach and the loss. In short, a failure to show breach, loss, or causation will be fatal to the case. Aside from these self-evident points, a range of other defences exists, depending on the facts at hand too. Consent by beneficiaries A beneficiary who consents to, or participates in, a breach will generally struggle to succeed in a claim, even if they receive no benefit from the wrongdoing. Nevertheless, a corporation may still bring a claim where some of its members have fraudulently and illegally exercised its powers (for example, in a pension trust setting) to...