Tony Wickenden: Time to review estate planning strategies


The start of a new year is always a good time to review financial planning strategies. An essential part of this, but one that is often overlooked, is to review one’s will. The importance of a will cannot be overstated. It is the foundation of any estate planning strategy.

Clients should not be seduced into thinking that it is alright if theirs is not up to date, as their family can always fall back on a deed of variation executed within two years of their death. Of course, they can currently but that does not mean they should. Recent news on this subject has been positive, however.

The March 2015 Budget announced a review of the use of deeds of variation, which took place in the autumn. The welcome news from the Autumn Statement was that the Government would not be introducing any new restrictions on how deeds of variation can be used for tax purposes, although it has said it will continue to monitor their use.

So, should one be needed, it can be used and, for inheritance tax and disposals driven by its terms, will be treated as having been made by the deceased on death. Useful – but as a safety net only. Indeed, planners should be telling their clients there is no substitute for a valid and comprehensive will that is regularly reviewed with appropriate adjustments made when necessary.

While you are about it, it is also worth reviewing pension death benefit nominations. This is especially true while we still have the craziness of the rule that states no nominee’s drawdown can be paid to a person or persons nominated by the scheme administrator unless there is no member nominee and no dependant of the member alive at the time a decision has to be taken on the destination of the death benefits after the member’s death.

It seems this rule is driving much more extensive nomination/expression of wish forms, with lots more names specified. It should also drive the regular review of said nominations.

Meanwhile, another topic of conversation over the past year has been around the disclosure of tax avoidance schemes provisions. Widening their reach is an intrinsically important part of the Government’s aim to be better informed on avoidance schemes and to be in a position to open enquiries and issue cash flow-generative accelerated payment notices.

In the summer, HM Revenue and Customs produced a consultative document proposing certain changes to the Dotas provisions. One of the areas of proposed change concerned IHT schemes. Representations were invited before the end of September; however, no announcement has yet been made following the close of this consultation period.

One of the key assets to factor into estate planning is any property you own. Ahead of IHT, though, owners of second properties may be more interested in proposals made in the Autumn Statement that, from April 2019, a payment on account of any capital gains tax due on the disposal of residential property will be required to be made within 30 days of the completion of the disposal. Currently, CGT is usually paid within 10 to 22 months of a disposal being made. The Government will publish draft legislation for consultation this year.

And that is as well as the higher rates of stamp duty land tax that are to be charged from 1 April on purchases of additional residential properties (above £40,000), such as buy-to-let properties and second homes. The higher rates will be 3 per cent greater than the current SDLT rates. The rates will not apply to purchases of caravans, mobile homes or houseboats. The Government will consult on the policy detail, including on whether an exemption for corporates and funds owning more than 15 residential properties is appropriate.

The additional money raised will help fund a series of incentives aimed at helping those struggling to buy their first home. The Government has set out a five point plan for housing that includes 400,000 affordable homes started by 2020/21 (including 200,000 starter homes and 135,000 Help to Buy shared ownership homes), Right to Buy schemes with five housing associations and extending the Help to Buy equity loan schemes.

Tony Wickenden is joint managing director of Technical Connection