United Kingdom: Private Client

1.1 The main factors which bring an individual within the scope of UK tax on income and capital gains are residence (§1.5-1.7), domicile (§1.9), the location of his assets, and the location of the sources of his income.

1.2 An individual who is not UK resident (§1.5-1.7) and is not temporarily non-resident (§1.8) has limited exposure to income tax (§2.1) and capital gains tax (§2.6). His exposure to income tax is limited to certain kinds of income having a UK source, e.g. rental income from UK real property (§3.2), profits of a trade carried on in the UK, employment income insofar as duties are performed in the UK (§3.1), and UK royalties (§3.3). His exposure to capital gains tax is limited to chargeable gains (§2.7) on the disposal (§2.8) of UK property (or shares in a “property rich” company) (§8.3) and of UK assets used in a trade that he carries on in the UK. Any such exposure to income tax and capital gains tax is subject to relief under an applicable double tax treaty and to unilateral relief.

1.3 By contrast, an individual who is UK resident (§1.5-1.7) is exposed to income tax (§2.1) in respect of his worldwide income and to capital gains tax (§2.6) on the disposal (§2.8) of assets wherever situated. He may also be exposed to income tax and capital gains tax where capital gains and income of trustees (§20.4; §20.6) or of a non-UK resident company (§20.6; §20.8) are treated as arising to him for tax purposes. In many cases, his exposure is subject to relief under an applicable double tax treaty, unilateral relief, and (if available) the remittance basis (§10). The remittance basis is not available to individuals who are domiciled (§1.9) or deemed domiciled (§1.10) in the UK.

1.4 An individual who is temporarily non-resident (§1.8) may be charged to income tax (§2.1) and capital gains tax (§2.6) on certain income and capital gains arising during the period of non-residence, with such income and capital gains treated as arising in the tax year (§2.13) of return.

1.5 The residence status of an individual must be determined for each tax year (§2.13). Whether an individual is UK resident or not for a given tax year depends principally on the number of midnights that he spends in the UK in that tax year. HMRC will disregard a limited number of midnights spent in the UK if exceptional circumstances apply (subject to certain limits). Exceptional circumstances normally apply where the individual has no choice about the time they spend in the UK where the situation is beyond their control.

1.6 An individual who has not been UK resident (§1.5-1.7) in any of the three previous tax years (§2.13) will not become UK resident for a tax year if he spends fewer than 46 midnights in the UK in that tax year. Any individual who spends 183 or more midnights in the UK in a tax year will usually be UK resident in that tax year. An individual who spends fewer than 183 midnights in the UK in a tax year may still be UK resident for that tax year, for example, where his only home is in the UK or he has full time work in the UK. In some circumstances, the residence status of an individual for a tax year depends on the number of midnights spent in the UK and the number of ties (§1.7) that the individual has with the UK. The more midnights the individual spends in the UK in a tax year, the fewer ties are necessary for him to be UK resident for that tax year.

1.7 The ties which are relevant to residence are (i) having a UK resident (§1.5-1.7) spouse, civil partner or minor child (ii) having available accommodation in the UK (iii) performing more than three hours work in the UK on 40 or more days in the tax year (§2.13) (iv) spending 91 or more midnights in the UK in one or both of the two previous tax years and (v) spending more midnights in the tax year in the UK than in any other country.

1.8 An individual is temporarily non-resident if, following a period of residence, he is non-UK resident (§1.5-1.7) for a period of five years or less, and he has been UK resident (§1.5-1.7) in at least four of the seven tax years (§2.13) before the tax year in which the period of non-residence begins.

1.9 For the general purposes of English law every individual has at any given time a domicile (§1.9) in one country alone. The domicile of an individual depends, in the first place, on the domicile that his father or (in some circumstances) mother had at the time of the individual’s birth (known as the individual’s “domicile of origin“). Upon attaining the age of 16, the individual may change his domicile to that of another country (his domicile of choice) by residing in that country with the intention of residing there permanently. If, later, he ceases to reside in that country and to have that intention, his domicile may revert to his domicile of origin, unless he establishes another domicile of choice.

1.10 For the purposes of income tax (§2.1) and capital gains tax (§2.6) an individual is deemed domiciled in the UK if he has been UK resident (§1.5-1.7) for at least 15 of the 20 previous tax years (§2.13) and has been UK resident for a tax year beginning after 5 April 2017. In addition, an individual who was born in the UK with a domicile of origin (§1.9) in the UK is deemed domiciled in the UK for the purposes of income tax and capital gains tax in any tax year for which he is UK resident.

2.1 Subject to the territorial limits and the reliefs mentioned in §1 and subject to the availability of the remittance basis (§10), income tax is generally charged on the total income of an individual for each tax year (§2.13). In relation to rental and trading income, expenditure incurred exclusively for the purposes of the rental business or (as the case may be) trade is generally deducted in computing this total, but there is a restriction on the deductibility of loan interest paid by landlords of let residential property.

2.2 Of the individual’s total income for the tax year (§2.13) ending 5 April 2021, income falling within his personal allowance (§2.3) suffers no income tax (§2.1), taxable income in the band up to £50,000 (having deducted the available personal allowance) suffers income tax at 20% (or 7.5% for dividends), taxable income in band £50,001 to £150,000 (having deducted the available personal allowance) suffers income tax at 40% (or 32.5% for dividends), and the balance suffers income tax at 45% (or 38.1% for dividends). The rates for the tax year ending 5 April 2022 have not yet been confirmed. In the application of these rates and bands to an individual’s income, dividends are treated as the top slice of that income.

Different rates and bands apply to Scottish taxpayers. Scottish taxpayers include those UK resident individuals whose main or only home is in Scotland, and those UK resident individuals who do not have their main or only home in any part of the UK but spend more midnights in Scotland than in any other part of the UK (i.e. England, Wales or Northern Ireland). Wales has had the power since 6 April 2019 to set its own rates and bands, but has chosen not to make changes in the tax year ending 5 April 2021.

2.3 An individual’s personal allowance is normally £12,500 for the tax year (§2.13) ending 5 April 2021, but is reduced by £1 for every £2 by which his total income for that tax year exceeds £100,000. The personal allowance for the tax year ending 5 April 2022 has not yet been confirmed. No personal allowance is available to an individual who claims the remittance basis (§10) for the relevant tax year. The personal allowance is only available to certain non-UK resident individuals (e.g. holders of British passports, residents of the Channel Islands and the Isle of Man, EEA citizens, and individuals benefiting from particular kinds of double tax treaty with the UK).

2.4 In addition, an individual may receive £2,000 of dividends in each tax year (§2.13) without any charge to income tax (§2.1) (although such dividends are still classed as taxable income and therefore still use up the ‘band’ for which different rates of income tax are charged), and modest annual tax-free allowances are generally available for payments of interest to individuals whose total income for the relevant tax year does not bring them into the 45% income tax rate band.

2.5 Subject to territorial limits broadly similar to those described in §1 in relation to income tax (§2.1), individuals with income from an employment or self-employment must also pay national insurance contributions on that income. For the tax year (§2.13) ending 5 April 2021, an employee whose income exceeds £9,500 pays national insurance contributions at 12% on the excess up to £50,000, and at 2% on the excess over £50,000. The rates for the tax year ending 5 April 2022 have not yet been confirmed. Different rates apply to the self-employed. There is a link between eventual entitlement to state pension and the number of tax years for which national insurance contributions have been paid.

2.6 Subject to the territorial limits and reliefs mentioned in §1, capital gains tax is generally charged on the total chargeable gains (§2.7) of an individual for each tax year (§2.13), after deducting allowable losses (§2.10) and the annual exempt amount (§2.10).

2.7 Broadly, chargeable gains are capital gains on the disposal (§2.8) of most kinds of assets, with exceptions including the main or only residence of an individual (subject to a number of conditions) (§8.3), cars, chattels with a predictable life of less than 50 years, and chattels for which the consideration does not exceed £6,000 (subject to special rules for collections of chattels).

2.8 The disposal of an asset includes the sale or gift of the asset, certain other occasions on which a capital sum is derived from an asset, and events deemed to involve a disposal, such as the appropriation of an asset to trading stock.

2.9 To compute the chargeable gain (§2.7) on the disposal (§2.8) of an asset, the individual should normally take the consideration or deemed consideration (§5.10) for the disposal of the asset and deduct expenditure incurred on the acquisition, enhancement or disposal of the asset.

2.10 The allowable losses that may be deducted are capital losses (computed in the same way as chargeable gains §2.9) realised in the relevant tax year (§2.13) and, if unused, in previous tax years. The annual exempt amount is £12,300 for the tax year ending 5 April 2021, but is not available to an individual who claims the remittance basis (§10). The annual exempt amount for the tax year ending 5 April 2022 has not yet been confirmed.

2.11 Once the total of the individual’s chargeable gains (§2.7) has been determined for the tax year (§2.13), and the allowable losses and the annual exempt amount (§2.10) have been deducted, the resulting figure is charged to capital gains tax at the relevant rate. The top rate of capital gains tax is 20%, except for capital gains on the disposal (§2.8) of residential property or carried interest, where it is 28%. Generally, these rates may be reduced to 10% and 18% respectively in the case of an individual who does not pay income tax at 40% (or 32.5% for dividends), but the amount of the chargeable gains of such an individual is brought into account in determining whether the higher capital gains tax rates apply to him.

2.12 Individuals are entitled to invest up to an annual limit (£20,000 for the tax year (§2.13) ending 5 April 2021) in an individual savings account (“ISA”) consisting of cash or shares, and can achieve shelter from income tax (§2.1) on the interest and dividends, and from capital gains tax (§2.6) on the capital gains, realised in that account. In addition, individuals can achieve shelter from income tax and capital gains tax by making contributions (subject to annual and lifetime limits) to a registered pension scheme, but the funds so contributed can only be used to provide retirement benefits which (apart from a 25% tax-free lump sum) will normally fall within the scope of income tax when paid. Other reliefs from income tax and capital gains tax exist to encourage business investment by individuals.

2.13 The tax year begins each 6 April and ends on the following 5 April. In some circumstances an individual may split a tax year into a period of residence and a period of non-residence, with income and capital gains arising during the period of non-residence not charged to UK tax. For example, a tax year may be split if an individual with no previous connections with the UK comes to live in the UK and arrives part of the way through that tax year.

2.14 Individuals who have to submit a tax return must do so, and pay any income tax or capital gains tax that is due, by 31 January following the end of the relevant tax year (§2.13). In some circumstances, six monthly advance payments of tax (known as “payments on account“) must be made, and these fall due on 31 January during the relevant tax year and 31 July following the end of the relevant tax year. Since 6 April 2020, both non-residents and UK residents who have disposed of UK residential property have been required to submit a tax return and pay any capital gains tax due within 30 days of the completion of the sale.

3.1 Income tax (§2.1) and national insurance contributions (§2.5) are generally deducted at source from the income of an employment. The obligation to make these deductions normally falls on the employer, but many employers delegate compliance with this regime to an agent. An employee who has suffered such deductions at source does not normally have to file a tax return unless he has other kinds of income, benefits in kind or capital gains for the tax year (§2.13).

3.2 Income tax (§2.1) must prima facie be deducted from payments of rent for UK real property to a non-UK resident (§1.5-1.7) landlord. However, under an arrangement known as the “non-resident landlord scheme“, it is possible for such a landlord to apply to HMRC to receive the rent gross, provided that he can satisfy HMRC that he has complied with all his UK tax obligations, including the obligation to file tax returns and pay the income tax due on the rent.

3.3 Income tax (§2.1) must generally be deducted at source from royalty payments and interest payments to non-UK residents.

There is no wealth tax in the UK.

5.1 The principal tax on gifts and transfers on death is inheritance tax, which is a charge on transfers of value (§5.2).

5.2 A transfer of value is a disposition by which the value of the individual’s estate (§5.3) is reduced. On death, an individual is deemed to have made a transfer of value equal to the value of his estate immediately before his death.

5.3 Generally, the estate of an individual includes all the property to which he is beneficially entitled, property which he has given away (including by transfer into trust) but from which he continues to benefit, and (in some circumstances) trust property in which he has a life interest (§19.3). However, the estate of an individual who is neither domiciled (§1.9) nor deemed domiciled for inheritance tax purposes (§5.9) in the UK excludes property situated outside the UK so that, for such an individual, inheritance tax is only relevant to the extent that assets are situated in the UK. Non-UK property representing the value of UK residential property is for this purpose generally treated as if situated in the UK (including, in certain circumstances, loans or security for loans in relation to such property).

5.4 A transfer of value (§5.2) by way of a lifetime gift to an individual made seven years or more before the death of the donor is not charged to inheritance tax (§5.1) on the donor’s death, provided the donor does not continue (after making the gift) to benefit from the property included in the gift. Transfers of value by way of lifetime gifts made during the last seven years of the donor’s life are brought into account on the donor’s death and added to the deemed transfer of value which takes place on the death itself (§5.2). The total of these transfers of value is then charged to inheritance tax (except to the extent that a relief or exemption applies), with an amount equal to the individual’s available nil-rate band (§5.8) being charged at a nil rate and the balance being charged at 40%, subject to a reduction in the rate payable in respect of gifts made to individuals more than three years before the death.

5.5 Inheritance tax (§5.1) which is charged on the death of an individual is normally a liability of his personal representatives (§17.1). The tax must normally be paid no later than six months after the end of the month in which the death occurred, but may in some circumstances be paid in 10 equal annual instalments (together with interest on the unpaid instalments) if it is charged on land, certain kinds of shares or securities, or a business. Inheritance tax due on a death must be paid before a grant of probate (§17.1) can be issued to the personal representatives. Subject to exceptions for low value and simple estates, an inheritance tax return must be submitted to HMRC with details of the assets and liabilities of the estate (§5.3) In practice, the personal representatives will file this return with HMRC in advance of the date on which the tax itself falls due, although the deadline for filing the return falls 12 months after the end of the month in which the death occurred.

5.6 Where a lifetime gift is charged to inheritance tax because the donor dies within seven years of making the gift, the tax liability falls on the donee, with a secondary liability falling on the personal representatives (§17.1) if the tax remains unpaid 12 months after the end of the month in which the death occurred.

5.7 Where an individual makes a transfer of value (§5.2) during his lifetime to the trustees of a trust (other than a bare trust or certain favoured kinds of trust), there is an immediate charge to inheritance tax at 20% to the extent that the individual’s available nil-rate band (§5.8) is exceeded, with further tax being charged if the individual dies within seven years of making the transfer of value.

5.8 The full nil-rate band is normally £325,000, but is reduced by the value of chargeable transfers made by the individual in the previous seven years, and may be increased where the individual has been predeceased by a spouse or civil partner (sharing their domicile) who did not use (or completely use) his or her nil-rate band. Where a home is left on death to a descendant or descendants and is within the scope of inheritance tax (§5.1), the deceased’s nil-rate band is increased by an amount called the residence nil-rate band (RNRB). The RNRB is £175,000 for a death in the tax year (§2.13) ending 5 April 2021. It will then increase in line with the Consumer Price Index from 2021 to 2022 onwards. It can also be increased where the deceased was predeceased by a spouse or civil partner who did not use (or completely use) his or her RNRB, and is progressively reduced where the value of the deceased’s estate (§5.3) exceeds a limit which currently stands at £2,000,000. For an estate worth £2,350,000 the RNRB is reduced to nil.

5.9 An individual is deemed domiciled for inheritance tax purposes in the UK in a particular tax year (§2.13) if he has been UK resident (§1.5-1.7) for at least 15 of the 20 tax years immediately preceding the relevant tax year and in addition for at least one of the four tax years ending with the relevant tax year. An individual is also deemed domiciled for inheritance tax purposes (and known as a “formerly domiciled resident“) in a particular tax year if he was born in the UK with a domicile of origin in the UK (§1.9), has acquired a non-UK domicile of choice (§1.9), is UK resident for the relevant tax year, and was UK resident for at least one of the two tax years immediately preceding the relevant tax year. Finally, an individual is deemed domiciled for inheritance tax purposes in the UK at any time if he was previously domiciled in the UK within the three calendar years immediately preceding that time.

5.10 A gift made during the donor’s lifetime is a disposal (§2.8) for the purposes of capital gains tax (§2.6), and is normally deemed for those purposes to have been made for a consideration equal to its market value at the date of the gift (but see §6.2). An asset passing on death is rebased to its market value (as at the date of the death) for the purposes of capital gains tax, with no capital gains tax arising on the death itself, so that an individual inheriting the asset takes it at a base cost which, for the purposes of capital gains tax on a subsequent disposal, is equal to its market value at the date of the death.

6.1 Transfers between spouses and civil partners (whether during life or on death) are generally exempt from inheritance tax (§5). However, this exemption is limited to the nil rate band that applies at the time of the transfer (currently £325,000) if, at the time of the transfer, the transferor is domiciled (§1.9) or deemed domiciled for inheritance tax purposes (§5.9) in the UK and the transferee has neither such status. If the transferee elects, after the transferor’s death, to be treated for inheritance tax purposes as domiciled in the UK, the exemption is unlimited, but the transferee then suffers the other inheritance tax consequences of being treated as domiciled in the UK, unless and until he has completed a period of 4 successive complete tax years (§2.13) of non-UK residence (§1.5-1.7) beginning any time after the date of the election.

6.2 For the purposes of capital gains tax (§2.6), while the disposal (§2.8) of an asset by way of gift is generally deemed to be for a consideration equal to the market value of the asset (§5.10), where the gift is between spouses or civil partners who are living together, the donee’s base cost in the asset is generally deemed to be the donor’s, so that no chargeable gain (§2.7) arises.

6.3 Lifetime gifts are exempt from inheritance tax (§5) if their value does not exceed £3,000 in each tax year (§2.13), and this exemption can, to the extent unused, be carried forward to the next tax year. In addition, lifetime gifts made by an individual in any one tax year to any one person are exempt from inheritance tax if the total value to that individual does not exceed £250. Further, regular lifetime gifts made by an individual out of his spare income are exempt from inheritance tax if they are part of his normal expenditure and do not diminish his normal standard of living. Gifts within certain limits made on the occasion of a marriage or civil partnership (e.g. a gift of up to £5,000 by a parent to a child who is getting married) are exempt from inheritance tax.

6.4 Agricultural property may enjoy complete relief from inheritance tax (§5) on a lifetime transfer or on death. Relieved agricultural property includes not only farmland but also cottages, farm buildings and farmhouses of a character appropriate to the land, but in each case only to the extent of the agricultural value of such assets (and not, for example, in respect of development value). For the relief to be available, the agricultural property must have been (i) occupied by the transferor for the purposes of agriculture for two years before the date of the transfer or (ii) owned by him throughout the period of seven years ending with that date and occupied throughout that period (by him or another) for the purposes of agriculture.

6.5 Business property may also enjoy complete relief from inheritance tax (§5) on a lifetime transfer or on death. The relieved property may consist of shares in a company which carries on the business (or in its holding company), or of a direct interest in the assets of a business. The full relief is not available in respect of shares listed on a recognised stock exchange, with the Alternative Investment Market (AIM) not being “recognised” for this purpose. The relief is not available where the business consists wholly or mainly of dealing in securities, stocks or shares, land or buildings or making or holding investments. The relief is restricted where non-business assets or surplus cash are held by the company. For the relief to be available, the business property must have been owned by the transferor for two years before the date of the transfer.

7.1 Gifts made by an individual, whether during his life or on death, to a charity (§26.1) which is recognised for UK tax purposes (§7.3) are exempt from inheritance tax (§5). In addition, where an individual leaves at least 10% of the value of his chargeable estate (§5.3) to a charity which is recognised for UK tax purposes, a lower rate of inheritance tax (36%) is applied when calculating any inheritance tax charged on the balance of his estate.

7.2 Further, individuals may on certain conditions obtain relief from income tax (§2.1) and capital gains tax (§2.6) on gifts to charities (§26.1) which are recognised for UK tax purposes (§7.3). For example, a gift out of taxed income by an individual to such a charity will normally enable the individual and the charity, between them, to reclaim all the income tax which the donor paid on the gross amount of the gift.

7.3 Charities (§26.1) which are recognised for UK tax purposes (§7.3) include all charities established in the UK which are registered with either the Charity Commission for England and Wales (§26.5) or the Scottish Charity Regulator, and (broadly) charities having equivalent status in other EU member states, or in Iceland, Norway or Liechtenstein, provided that such charities are registered with HMRC. A recent judgement from the Supreme Court held that, provided charities have exclusively charitable purposes under English law, such charities do not necessarily need to be subject to UK law, in order to benefit from inheritance tax (§5.1) relief. The full consequences of this case law are still being considered, in the light of the UK’s exit from the European Union.

8.1 The value of real property situated in the UK (and of non-UK property (including shares) representing the value of UK residential property) is included in the estate (§5.3) of the owner for the purposes of inheritance tax (§5.1) even where the owner is neither domiciled (§1.9) nor deemed domiciled for inheritance tax purposes (§5.9) in the UK, although debt used to purchase the property (such as a mortgage loan from a bank) may generally be deducted from that value, unless the circumstances fall within limited anti-avoidance rules in relation to borrowing.

8.2 Rent derived by an individual (whether or not UK resident (§1.5-1.7)) from real property situated in the UK is subject to income tax (§2.1; §3.2).

8.3 An individual (whether or not UK resident (§1.5-1.7)) who realises a chargeable gain (§2.7) on the disposal (§2.8) of UK property is charged to capital gains tax (§2.6), subject (in the case of residential property) to an exemption which is fully available (on conditions) where the property has been his main or only residence throughout his period of ownership, and may be partially available where that has been the case for only part of that period. In addition, capital gains tax is charged at non-residential property rates, if a non-resident disposes of shares in a “property rich” company in which they have a “substantial interest”. A company is classed as “property rich” if at least 75% of the value of its assets are (or are derived from) UK property. A non-resident is classed as having a “substantial interest” if they (together with any connected parties) hold a 25% interest (or greater interest) in the company at the date of the disposal, or have held such an interest at any time in the two years preceding the share disposal.

8.4 An annual tax known as the annual tax on enveloped dwellings (“ATED“) is charged, subject to reliefs, on companies which own UK residential property with a value of £500,000 or more.

8.5 Purchasers (whether or not UK resident (§1.5-1.7)) of UK real property must normally pay stamp duty land tax on the purchase price. This tax is charged at progressive rates, with the highest rate for an individual purchaser of UK residential property applying to the excess of the price over £1,500,000, and generally being 12% (or 15% if the individual already has at least one residential property anywhere in the world and the new property is not to replace his main home). Such rates have been temporarily reduced for the period from 8 July 2020 to 31 March 2021.

8.6 Local authorities impose council tax on UK residential property, with the rate of tax depending principally on an assumed capital value of the property (based on 1991 prices for England and Scotland and 2003 prices for Wales).

8.7 Business rates are charged on most UK non-domestic properties, such as shops, offices, public houses, warehouses, factories, holiday rental homes and guest houses. Business rates are based on the open market rental value of the property on 1 April 2015, which is estimated by the Valuation Office Agency.

Purchasers of shares registered in the UK may have to pay stamp duty or stamp duty reserve tax at 0.5% on the consideration. Individuals who make supplies of goods or services in the course of a business may have to charge value added tax (“VAT“) at up to 20% on their supplies and account for that tax to HMRC. VAT and customs duties may be charged on the import of goods from outside the European Union. Excise duties are generally charged on motor fuel, alcohol, tobacco, betting and vehicles.

10.1 The remittance basis of UK taxation is available to a UK resident (§1.5-1.7) individual who is neither domiciled (§1.9) nor deemed domiciled (§1.10) in the UK. The effect of claiming the remittance basis for a tax year (§2.13) is that the non-UK income and non-UK chargeable gains (§2.7) of the individual for that tax year are only taxed if and to the extent that they are remitted to the UK (§10.3).

10.2 An individual who has been UK resident (§1.5-1.7) for a certain number of tax years (§2.13) must pay an annual charge to claim the remittance basis (§10.1). The annual charge is £30,000 for an individual who has been UK resident for seven or more of the previous nine tax years, and £60,000 for an individual who has been UK resident for 12 or more of the previous 14 tax years.

10.3 Broadly, the non-UK income and non-UK chargeable gains (§2.7) of an individual are (subject to certain reliefs and exemptions) remitted to the UK if they are (or anything deriving directly or indirectly from them is) brought to, or received or used in, the UK by (or for the benefit of) the individual, or a spouse, civil partner, cohabitant, minor child or minor grandchild of the individual, or any of a class of other prescribed persons closely connected with the individual. Relief may be available where non-UK funds are brought to the UK for investment in an eligible company.

11.1 Before becoming UK resident (§1.5-1.7), an individual should consider certain preparatory steps. In view of the territorial limits described in §1.2, such steps should normally be carried out in a tax year (§2.13) before the tax year in which the individual first becomes UK resident, and reliance should not be placed on split year treatment (§2.13). It is assumed below that the individual is not domiciled (§1.9), deemed domiciled (§1.10) or deemed domiciled for inheritance tax purposes (§5.9) in the UK, and is not temporarily non-resident (§1.8). Before taking any step such as mentioned below, the tax consequences of the step in any non-UK jurisdiction should be considered.

11.2 The individual should consider realising income or capital gains so as to create a cash fund (often called “clean capital“), which he should be able to use in the UK without giving rise to UK tax charges, and placing that clean capital in a separate non UK bank account. Arrangements should be made with the bank for any income produced by the clean capital to be paid into a separate account and not remitted to the UK (§10.3), with all remittances to the UK being from the clean capital account only.

11.3 The individual should review his worldwide property, including shareholdings in companies and life insurance policies, and the terms (and historical income and capital gains) of existing trusts (§19.2) and foundations, to ensure that his becoming UK resident (§1.5-1.7) will not give rise to adverse tax treatment of these structures. The individual might consider steps to rebase the value of any assets standing at a capital gain. Consideration should be given to taking a substantial dividend from a wholly-owned company, or winding up such a company or an existing family trust, to create clean capital (§11.2) and avoid heavy UK tax charges that might arise on distributions from such structures during the individual’s period of UK residency. Funds extracted in this way and not required for expenditure during the period of UK residency might be used to establish a new trust or foundation structure, potentially allowing those funds to be held tax-efficiently on a long-term basis for the benefit of future generations.

11.4 The individual should ensure that any directorships do not give rise to UK tax charges, as the exercise of control in the UK over a non-UK company may bring any profits of that company within the scope of UK taxation and cause various UK tax regimes to apply in relation to that company. In addition, if the individual is a trustee, they should consider whether their becoming UK resident will impact on the taxation of the trust.

11.5 Assuming the individual has a non-UK domicile (§1.9), he should protect this status by ensuring that at all times he has evidence of a plan, and of practical preparation, to leave the UK after a limited period or on the occurrence of an event such as retirement.

12.1 To the extent that English law governs succession to an adult individual’s estate (§5.3), he is free to leave that estate to whomsoever he wishes by making a valid Will, subject only to a claim under the regime described in §12.3.

12.2 If an individual dies without a valid Will disposing of his whole estate (§5.3), then to the extent that English succession rules apply and the property does not pass to a surviving beneficial joint tenant (§16.2), the intestacy rules (§16.2) will generally govern succession to his estate (or to the part of his estate not disposed of by a valid Will).

12.3 Certain categories of person (including a spouse, civil partner, former spouse, former civil partner, unmarried cohabitant or child of the deceased, or anyone else who was being maintained by the deceased before the death) may be able to bring a claim against the personal representatives (§17.1) of an individual who died domiciled (§1.9) in England and Wales if reasonable financial provision is not made for that person under the deceased’s Will or under the intestacy rules (§16.2) or otherwise as a result of his death. Such a claim may also be brought in relation to property which the deceased and another person owned as beneficial joint tenants (§16.2). It should be noted that no such claim may be brought under English law against the personal representatives of an individual who died domiciled (§1.9) outside England and Wales.

13.1 For succession purposes, there is no special regime for matrimonial property or the property of a civil partnership.

13.2 Where an individual’s estate (§5.3) (or part of it) is not disposed of on death by a valid Will, then a surviving spouse or civil partner will gain an interest in the estate (or that part) under the intestacy rules (§16.2). A cohabitant who was not a spouse or civil partner of the deceased is not entitled to any portion of the deceased’s estate under the intestacy rules.

13.3 A spouse or civil partner may have a claim against the personal representatives (§17.1) of an individual who died domiciled (§1.9) in England and Wales (§12.3).

13.4 For matrimonial law purposes, the courts of England and Wales have wide discretion to divide property on divorce or dissolution of a civil partnership. On the separation of a cohabiting couple, the cohabitants have no right against each other under matrimonial law, but may have rights under trust law.

14.1 The application of English succession laws depends on the deceased’s last domicile (§1.9) and on the location of any immovable property (i.e. real property).

14.2 Succession to movable property (e.g. cash, shares, chattels) is, as a matter of English law, governed by the laws of the deceased’s last domicile (§1.9).

14.3 Succession to immovable property is, as a matter of English law, governed by the laws of the jurisdiction in which that property is located. Therefore, according to English law, succession to land owned in France is governed by the succession laws of France.

14.4 The above position may be altered in accordance with the private international laws of any non-English jurisdiction to which English law refers the succession, including the provisions of the European Succession Regulation (§15.2) where they apply.

15.1 Where there is conflict between English succession laws and succession laws of another jurisdiction, English law generally applies the doctrine of total renvoi. This means that, where an English court refers the succession to the laws of a foreign country, the English court will generally apply the domestic and private international laws of that country (i.e. including its conflict of laws rules) and so will seek to decide the matter as the foreign court would decide it.

15.2 Although the UK has not adopted the European Succession Regulation (Regulation (EU) No. 650/2012), that Regulation may be relevant where the deceased was connected with both the UK and a state which has adopted the Regulation. Suppose a British national who is most closely connected with England dies owning land in France. English law will refer succession to the French land to French law (§14.3), and will take French law to include those provisions of the Regulation that permit an individual to choose (as the law governing succession to his whole estate (§5.3)) the law of a state of which he is a national at the time of making the choice or at death. Therefore, if the individual has made a Will choosing English law to govern succession to his whole estate, an English court should accept that English law governs the succession to his French land. This should continue to be the position after the UK has ceased to be a member state of the European Union.

16.1 It is advisable for an adult individual with assets in England or Wales, or to whom English succession law applies, to make a Will to ensure that his estate (§5.3) passes in accordance with his wishes, and in some cases to avoid unnecessarily large liabilities to inheritance tax (§5). If an individual’s only connection with England is that he owns real property there, succession to that property is in accordance with English law and a Will is advisable. Individuals should be aware that it is possible for a validly made Will to be revoked by the making of a later Will, including where the later Will is made in a non-English jurisdiction, and that marriage revokes a Will unless it was made expressly in contemplation of marriage to a particular person.

16.2 If an individual dies without a valid Will disposing of his whole estate (§5.3), then to the extent that English succession rules apply, the English intestacy rules (§16.3; §17.1) generally govern succession to his estate (or to the part of his estate not disposed of by a valid Will). However, where property is owned by two or more individuals as beneficial joint tenants, that asset will pass on the death of one of those individuals to the surviving owner or owners regardless of the existence or terms of any Will. It is common for spouses or civil partners to own their English home as beneficial joint tenants.

16.3 The application of the intestacy rules (§16.3; §17.1) depends on which family members survive. Suppose, for example, that an individual dies without any valid Will, that succession to his estate is entirely governed by English law, that his net estate capable of passing by Will (i.e. excluding jointly owned property) is worth more than £270,000, and that he is survived by a spouse and children. In that scenario, the surviving spouse takes the chattels, a legacy of £270,000 free of tax and costs, interest on that legacy from the date of death until payment, and half the balance of the estate absolutely; and the children take the other half of that balance in equal shares contingent upon reaching the age of 18 or marrying under that age.

16.4 To be validly executed for the purposes of English law, a Will must normally be in writing and signed by the testator (or by some other person in his presence and at his direction), the testator must intend by his signature to give effect to the Will, the testator’s signature must be made or acknowledged by the testator in the presence of two or more witnesses present at the same time, and each witness must either sign (or acknowledge his signature) in the testator’s presence.

16.5 However, a Will which does not satisfy the above requirements is nonetheless treated as validly executed for the purposes of English law if its execution conformed to the law in force in (i) the territory where it was executed or (ii) the territory where, at the time of its execution or of the testator’s death, the testator was domiciled (§1.9) or had his habitual residence or (iii) a state of which, at either of those times, he was a national.

16.6 There are a number of further circumstances under which a Will not satisfying the above requirements is nonetheless treated as validly executed for the purposes of English law. In order to ease difficulties arising during the Covid 19 Pandemic, legislation has been passed which temporarily allows Wills in England and Wales to be witnessed by video link. This legislation applies retrospectively to Wills made on or after 31 January 2020 and on or before 31 January 2022.

17.1 The responsibility of administering the estate (§5.3) of a deceased individual falls on the personal representatives of the deceased. Where the deceased died having made a valid Will appointing executors, the personal representatives are those executors, who have the right to apply for a grant of probate, which will give them the right to deal with the deceased’s assets. Where the deceased did not validly appoint executors who are able and willing to act, the personal representatives are the administrators, who are appointed under the intestacy rules (§16.2). Broadly, individuals who have an entitlement under the intestacy rules to assets of the deceased’s estate have the right to apply for letters of administration, by which they will become administrators and gain the right to deal with the assets of the estate.

17.2 Where the deceased has left a valid Will governing the devolution of his estate (§5.3), the personal representatives (§17.1) must distribute the assets of the estate in accordance with the terms of the Will. To the extent that the intestacy rules (§16.2) apply, the personal representatives must distribute the assets of the estate in accordance with those rules.

17.3 The administration of an estate (§5.3) proceeds broadly as follows. The personal representatives (§17.1) collect in the assets of the estate, pay all the debts and liabilities (including taxes), and then distribute the assets in accordance with the Will or intestacy rules (§16.2) (as applicable).

17.4 Personal liability of personal representatives (§17.1) is generally limited to the net value of the assets of the estate.

18.1 Individuals can create trusts (§19.2), partnerships and companies to hold family wealth. The use of trusts is the most common method to regulate succession to private family wealth. English law does not currently allow the creation of private foundations.

18.2 By transferring assets into trust (§19.2) during his lifetime, an individual may enjoy greater certainty as to the ultimate devolution of those assets than if he owned those assets himself and allowed them to pass under a Will on his death. Further, a trust arrangement can provide a higher degree of flexibility, confidentiality and asset protection than personal ownership. Although trustees (§20.4; §20.6) are now subject to a number of disclosure regimes, disclosure is generally to public authorities and not to the public itself. For further details see §20.3.

18.3 However, the creation of a trust by an individual who is domiciled (§1.9) or deemed domiciled for inheritance tax purposes (§5.9) in the UK is costly in terms of UK tax, and so such an individual may wish to consider an alternative asset-holding structure such as a family partnership or family investment company.

19.1 A family investment company, like any other company, may be established under English law by incorporation, which in broad terms involves one or more intended members choosing a name and registered office for the company, adopting constitutional documents, deciding whether to own shares in, or provide a guarantee to, the company and in either case in what amount, appointing one or more directors, and registering certain information and documents with the registrar of companies (§20.1). In the case of a company constituted by shares, thought will need to be given as to whether different share classes should be created and whether a shareholders’ agreement is appropriate.

19.2 A trust (§19.2) is established when specified property is transferred by one person (called the settlor) to other persons (called the trustees), or else comes to be held by the settlor himself as trustee, for the benefit of specified persons or a defined class of persons (called the beneficiaries), so that the trustees are legally obliged to hold and administer those assets for the benefit of the beneficiaries.

19.3 A trust (§19.2) under which a beneficiary (§19.2) is entitled to income as it arises to the trustees is called a life interest trust, and a trust under which beneficiaries have no fixed entitlement but may benefit at the discretion of the trustees (§19.2) is generally called a discretionary trust. A trust under which the trustees hold assets as mere nominees for a beneficiary or beneficiaries, who (if adult) can call for those assets to be transferred to them at any time, is generally called a bare trust.

19.4 Normally, the terms of a trust (§19.2) are set out in a trust document, but English legislation will (so far as it applies to a trust) generally give the trustees (§19.2) a range of standard administrative and other powers if these are not set out in that document. Since 6 April 2010 all interests of beneficiaries (§19.2) under a trust (other than a charitable trust (§26.1)) governed by English law must vest within 125 years of the creation of the trust.

19.5 Trusts (§19.2) do not have separate legal personality and can be created without any registration process. However, trustees (§19.2) of a UK resident trust are generally required to disclose to HMRC certain details, including details of the settlor (§19.2), beneficiaries (§19.2) and assets of the trust, and HMRC may in turn provide those details to other UK public authorities and non UK tax authorities with which the UK has reciprocal arrangements. In addition, certain other trusts with a UK connection are required to register with HMRC as per §20.3. In addition, should a UK domiciled (§1.9) individual create a non-UK resident trust during their lifetime, anyone who is involved in a professional capacity has an obligation to inform HMRC of the creation.

20.1 A company incorporated under English law must make certain information and documents public, normally including the name and any previous names of the company, its registered address, date of incorporation, the nature of its business, the full names and certain other details of the directors of the company and (broadly, and subject to a number of exceptions) of any person who ultimately owns or controls the company, certain resolutions of the company, its constitutional documents and accounts. The publication of the above information and documents is achieved by requiring the directors of the company to make certain filings with the registrar of companies (Companies House), which in turn makes them available to the public.

20.2 An English limited liability partnership must make certain information and documents public under rules similar to the above rules applying to English companies. English general partnerships are not subject to these rules.

20.3 There is no obligation to make public any information or document relating to a trust (§19.2) which is not a charitable trust (§27.1). However, under UK regulations implementing the Fifth Money Laundering Directive, all UK trusts (regardless of whether they have a UK tax liability) will need to register details of their trust and beneficial owners with HMRC. In addition, non-UK trusts which have UK tax liabilities, acquire UK real estate or engage with UK service providers (if there is another connection with the UK) need to register, providing inter alia, details of beneficiaries and information about non-EEA companies controlled by the trust. This information will not be publicly available but will be accessible by those who can demonstrate a legitimate interest in accessing the information from an anti-money laundering perspective (subject to certain defences). For trusts which control a non-EEA company, there is no requirement for the requestor to show a legitimate interest although requests are expected to be in the line with the spirit of the directive.

21.1 The tax treatment of settlors (§19.2), trustees (§19.2) and beneficiaries (§19.2) of a trust (§19.2) (other than a bare trust (§19.3)) depends in the first place on whether they are UK-resident (§1.5-1.7; §21.5) and, in the case of settlors and beneficiaries, whether they are domiciled (§1.9), deemed domiciled (§1.10) or deemed domiciled for inheritance tax purposes (§5.9) in the UK. Property held on a bare trust is treated for tax purposes as belonging to the beneficiaries (§19.2), and the rules described below do not apply to bare trusts.

21.2 In general, the non UK assets of a trust, provided the trust was funded by a settlor (§19.2) who (at the time of the funding) was neither domiciled (§1.9) nor deemed domiciled for inheritance tax purposes (§5.9) in the UK, fall outside the scope of inheritance tax (§5), and this continues to be the case even if the settlor later becomes domiciled or deemed domiciled for inheritance tax purposes in the UK (unless he is a formerly domiciled resident (§5.9)). For this purpose, non-UK assets representing the value of UK residential property are generally treated as UK assets.

21.3 On the other hand, a trust (§19.2) which holds UK assets (or non UK assets representing the value of UK residential property), or which was funded by a settlor (§19.2) who (at the time of the funding) was domiciled (§1.9) or deemed domiciled for inheritance tax purposes (§5.9) in the UK or who is a formerly domiciled resident, is generally subject to inheritance tax (§5) charges every 10 years and when assets are distributed to beneficiaries (§19.2) otherwise than as income. However, if such a trust is a life interest trust (§19.3) created before 22 March 2006, or a life interest trust created under a Will or for a disabled person, the property of the trust might not be subject to these charges every 10 years and on distributions, and might instead be treated for the purposes of inheritance tax as included in the estate (§5.3) of the beneficiary entitled to the life interest.

21.4 The overall UK income tax (§2.1) and capital gains tax (§2.6) treatment of a trust (§19.2) depends very significantly on whether the trustees (§19.2) are UK resident. The trustees as a body are treated as UK-resident if, for example, they are individuals who are all UK resident (§1.5-1.7) or where the only trustee is a company which is resident in the UK for UK tax purposes. The trustees as a body will be treated as non-UK resident if, for example, they are individuals none of whom is UK resident or where the only trustee is a company which is not resident in the UK for UK tax purposes. If at least one trustee is UK resident and at least one is not, then generally the trustees as a body are treated as UK resident only if the settlor was UK resident or domiciled (§1.9) or deemed domiciled (§1.10) in the UK when he made the trust or provided funds. For the purposes of the above rules, a trustee which is a company is treated as UK resident if it is acting as trustee in the course of a business which it carries on in the UK through a branch, agency or permanent establishment there.

21.5 If the trustees (§19.2) and the settlor (§19.2) are UK resident (§1.5-1.7; §21.4) and the settlor or his spouse or civil partner can benefit from the trust in any circumstance whatsoever, then income arising to the trustees is generally charged to income tax (§2.1) on the settlor. Even where the settlor or his spouse or civil partner cannot benefit, the income arising to the trustees will still be charged to income tax on the settlor if a minor child of the settlor actually benefits from income (including accumulated income) of the trust, or the trustees make (or repay) a loan to the settlor or his spouse or civil partner.

21.6 In addition, where the trustees (§19.2) are UK resident (§21.4), they are generally subject to income tax (§2.1) and capital gains tax (§2.6) in a broadly similar way to individuals but sometimes at higher effective rates, with the trustees’ precise income tax treatment depending in part on whether the trust is a life interest trust (§19.3). There are rules to prevent double taxation where the settlor (§19.2) also suffers income tax on the trustees’ income under the rule described in §21.5. Similarly, where a UK-resident beneficiary (§19.2) receives from UK-resident trustees a distribution which is chargeable to income tax in the hands of the beneficiary, credit may be available to that beneficiary for income tax which has been paid by the trustees.

21.7 Where the trustees (§19.2) are non-UK resident (§21.4) and do not realise UK source income or dispose of certain kinds of UK assets (such as UK property or shares in a property rich company (§8.3)), charges to income tax (§2.1) and capital gains tax (§2.6) do not generally fall on the trustees themselves, but may in certain circumstances fall on the settlor (§19.2) or beneficiaries (§19.2) instead.

21.8 For example, if a settlor is UK resident and is domiciled (§1.9) or deemed domiciled (§1.10) in the UK, chargeable gains (§2.7) arising (or deemed to arise (§21.11; §21.12)) to the non UK resident trustees are generally charged on the settlor. Similarly, if a settlor is UK resident and is domiciled or deemed domiciled in the UK, income arising to the non-UK resident (§21.4) trustees (or to a non UK company owned or ultimately owned by such trustees) and from which the settlor (or his spouse or civil partner) can benefit directly or indirectly is generally charged on the settlor. There exists transitional protection from the above charges for a UK resident settlor who was neither domiciled nor deemed domiciled in the UK when he made the trust (or any addition to the trust) and has subsequently become deemed domiciled (but not actually domiciled) in the UK, but this protection is not available to a settlor who is a formerly domiciled resident (§5.9), and the protection is irreversibly lost if, for example, the settlor adds further property to the trust at a time when he is deemed domiciled in the UK.

21.9 Where chargeable gains (§2.7) or income are not taxed on the settlor under the rules described in §21.8 above (for example, because the settlor is non-UK resident (§21.4) or dead, or is neither domiciled nor deemed domiciled in the UK, or enjoys the transitional protection described in §21.8 above), the chargeable gains or income can be charged on UK resident beneficiaries (§19.2) who receive (or, in some cases, have received in the past) benefits from the trust. Such beneficiaries, if neither domiciled (§1.9) nor deemed domiciled (§1.10) in the UK, may in some cases obtain protection from these charges by claiming the remittance basis (§10) if the benefits are not remitted to the UK (§10.3). Anti-avoidance rules may apply, for example, where non-UK resident trustees (§19.2) make distributions to non-UK resident (§1.5-1.7) or non-UK domiciled individuals who, later, make onward gifts (directly or indirectly) to UK resident individuals within specified time limits. The main effect of the application of these anti-avoidance rules is to impose income tax and capital gains tax on the onward gifts as if they were distributions made directly by the non-UK resident trustees to the ultimate UK resident donees.

21.10 Protection from some of the income tax charges described at paragraphs §21.8 and §21.9 above may be claimed in certain circumstances where the arrangements were genuinely commercial and did not have a tax-avoidance purpose.

21.11 Trustees (§19.2) are generally deemed for the purposes of capital gains tax (§2.6) to make a disposal (§2.8) at market value of any asset which is distributed to a beneficiary (§19.2) (or to which a beneficiary becomes absolutely entitled), in which case the beneficiary takes the asset with a base cost equal to that value. However, where the distribution of the asset attracts a charge to inheritance tax (§5.1) under the rules described in §21.3, it may be possible to elect for the beneficiary to take the asset at the trustees’ base cost, so that capital gains tax is deferred.

21.12 In some circumstances a capital gain arising to a non-UK resident company is attributed to trustees (§19.2) or UK-resident (§1.5-1.7) individuals who are shareholders or creditors of the company, subject to reliefs for commercial arrangements.

21.13 A partnership is generally treated as transparent for UK tax purposes so that, broadly, the partners are taxed on the profits of the partnership in proportion to their rights to share in those profits.

21.14 A family investment company (§19.1) which is incorporated under the laws of the UK or is centrally managed and controlled in the UK is generally exposed to corporation tax at 19% on its worldwide profits, subject to a range of potential reliefs, including relief under a double tax treaty.

21.15 Directors of a company, and individuals (known as “shadow directors“) with significant influence over such directors, generally suffer income tax (§2.1) as if they were employees on the remuneration and other benefits that they receive from the company.

English law recognises trusts (§19.2) and private foundations established under non-English law.

23.1 Generally, the governing law of a trust (§19.2) makes no difference to the treatment of its settlor (§19.2), trustees (§19.2) and beneficiaries (§19.2) for UK tax purposes, and the rules set out in §21 will apply.

23.2 Structures which are not trusts (§19.2) must generally be characterised as either trusts or companies for the purposes of UK taxation, and are taxed accordingly.

24.1 If a beneficiary (§19.2) has a fixed entitlement under a trust (§19.2), an English court generally has power to make an order for the payment of the income from the trust to be directed to a creditor of the beneficiary.

24.2 However, where a potential beneficiary (§19.2) of a discretionary trust (§19.3) has no legal right to the trust assets, an English court will not, generally, order payment of trust funds to a creditor of that beneficiary. However, the English court has power to set aside a transaction by which assets were transferred into trust with the intention of defeating the claims of potential creditors.

24.3 However, the assets of any trust (§19.2) may be regarded by an English court as a financial resource of a beneficiary (§19.2) or potential beneficiary in reckoning his liability to make payments in divorce or child maintenance proceedings, and to satisfy claims in such proceedings the English court has wide powers to make orders against the trustees (§19.2) of, in relation to the assets of, such a trust.

25.1 The age of majority in the UK is 18 years. However, it is common for trusts and Wills to be drafted so that a child or grandchild’s interest depends upon him reaching a greater age, for example, 21 or 25 years.

25.2 Property given to a child or grandchild who is under the age of 18 is generally held on trust (§19.2) for that individual, and the trustees (§19.2) may have wide powers under the terms of the gift or under the general law to invest and manage the property and to use it for his benefit before he reaches that age.

25.3 UK tax rules make it generally quite efficient for grandparents to set up bare trusts (§19.3) for their grandchildren, but not for parents to set up such trusts for their children. Where a grandparent makes a gift into bare trust for the exclusive benefit of a grandchild, that gift will not suffer any inheritance tax (§5) on the grandparent’s death if the grandparent survives seven years from the date of the gift, and the income and capital gains arising to the trustees (§19.2) are treated as the grandchild’s for tax purposes and so may fall within the grandchild’s personal allowance (§2.3) and annual exempt amount (§2.10).

26.1 Under English law, an individual (called the donor) may, by creating a Lasting Power of Attorney (“LPA“), give authority to one or more individuals (called attorneys) to deal with the donor’s property or make decisions relevant to the donor’s health and welfare if the donor loses mental capacity. One kind of LPA relates to decisions about the donor’s property, and another kind of LPA to decisions about the donor’s health and welfare (such as whether the donor should go into a nursing home or receive life-sustaining medical treatment).

26.2 If more than one attorney (§26.1) is appointed under a LPA (§26.1), the attorneys can be appointed to act either jointly (in which case they must decide everything together) or jointly and severally (in which case one of them alone may make a decision). The donor (§26.1) may also specify binding or non-binding preferences in a LPA. Attorneys come under the supervision of the Court of Protection.

26.3 If no LPA (§26.1) has been created by an individual who becomes mentally incapable of managing his property, an application must be made to the Court of Protection for the appointment of a “deputy”, who has a similar role to that of an attorney (§26.1) appointed under a LPA. The creation of a LPA is simpler, quicker and cheaper than such an application, and allows the donor (§26.1) to decide certain matters in advance and to choose who will be making decisions on his behalf.

26.4 An English LPA (§26.1) is, in practice, of limited relevance to a donor (§26.1) who is not living in England and whose assets are situated outside England.

27.1 The simplest form of English charity (§26.1) is the charitable trust (§19.2). The named trustees (§19.2) hold and control the assets of the charity in their personal names but must use them for exclusively charitable purposes in accordance with the terms of the trust. This arrangement is suitable for the simplest charities, particularly those which are grant making, do not pursue charitable activities themselves, and will not have employees or own land.

27.2 Another common form of English charity is a charitable incorporated organisation (“CIO“), which is like a charitable company (§27.3) but is regulated only by the Charity Commission for England and Wales (§27.5). The compliance obligations falling on a CIO are somewhat lighter than those falling on a charitable company. A CIO only comes into existence once it has been registered with the Charity Commission for England and Wales, which can take several months.

27.3 Another common form of English charity is a charitable company limited by guarantee. This form is generally less attractive than a CIO (§27.2) because it is regulated by both the Charity Commission for England and Wales (§27.5) and Companies House and filings must be made to both bodies. However, unlike a CIO, a charitable company limited by guarantee can be established very quickly and is a familiar form of legal entity recognised around the world.

27.4 Whatever form is chosen, a trust or body is not a charity for the purposes of English law unless it is established (and its constitutional document requires its property to be used) only for one or more of the statutory purposes and only for the public benefit. The statutory purposes include the relief of poverty, and the advancement of education, religion, health, and the arts, and may be carried on anywhere in the world.

27.5 The Charity Commission for England and Wales is the body responsible for the regulation of charities in England and Wales. Most English charities with a gross annual income over £5,000 must be registered with and send annual filings to the Commission, which maintains a public register including for each registered charity the names of its trustees, its charitable purposes, and copies of its filed accounts.

28.1 Amendments to the tax rates, bands, allowances and rules referred to above typically take effect from the beginning of each new tax year (§2.13), and so changes should be expected with effect from 6 April 2021. Details of some of these changes are set out in §2, although many of the rates and allowances have not yet been confirmed for the tax year ending 5 April 2022. It also should be noted that whilst legislation had previously been passed to reduce the corporation tax rate to 18% from 1 April 2020, the UK government reversed this decision and it remains at 19% for the 2021 financial year. It is not yet known what rate will be imposed for 2022.

28.2 The UK Government has announced that they intend to impose an additional SDLT surcharge of 2% on non-residents buying UK residential property from 1 April 2021. This will be payable in addition to the existing SDLT liability 3% surcharge for additional homes.

28.3 The UK Government also announced a full review into Business Rates as mentioned in §8.7 is expected, although the intended date of the review is as yet unknown.

28.4 In addition, the UK Government has asked the Office of Tax Simplification to undertake a two stage review into Capital Gains Tax, with the first stage review being published on 11 November 2020. It is not known what changes, if any, the Government will make to capital gains tax in response to this report.

28.5 Further, a cross party parliamentary body (The All-Party Parliamentary Group for Inheritance and Intergenerational Fairness (“the “APPG IIF”)) published a discussion paper in January 2020 entitled “Reform of Inheritance Tax”. The changes which the Government plan to make post this report are unknown.

28.6 Finally, we expect a new beneficial ownership register for overseas companies and other legal entities owning UK properties to come into force in 2021.