Life Interest Trusts in Wills for Spouses, Civil Partners or Unmarried Partners

Life Interest Trusts in Wills for spouses, civil partners or unmarried partners. 

The technical term for a life interest arising under a Will is an “immediate post-death interest”. Life Interest Trusts give a particular beneficiary the legal right to receive the income from, or to use property comprised in the trust. This right normally lasts throughout the beneficiary’s

lifetime. Sometimes the right terminates earlier, for example on the beneficiary’s remarriage, or if the trustees exercise any overriding powers under the Will. The beneficiary is often referred to as the life tenant.

In addition to the life tenant’s right to receive the income from, or to use any property (including the home) comprised in the trust, the trustees will usually be given a power to advance some or all of the capital in the trust to the life tenant and the beneficiaries entitled after the life tenant’s death (referred to below as the ultimate beneficiaries). The trustees will not be required to exercise such a power, but will be able to do so if they consider it appropriate.

The Will specifies what will happen to the remaining assets held in the trust on the life tenant’s subsequent death (to the extent that any power of appointment has not been exercised). The life tenant does not have outright ownership of the trust assets and the trustees will retain control. The life tenant can benefit from the trust assets, while the capital is preserved for the ultimate beneficiaries. The trust assets will not pass under the life tenant’s own Will.

While income can be paid to the surviving spouse (the life tenant) throughout their lifetime, capital can be preserved for the children of the former marriage or civil partnership. A further use of such a trust is to control the level of income for purposes of means tested benefits, with protection in the context of care home fees.

If you have any enquiries regarding setting up a life interest trust in your will, please get in touch with us at 020 8240 9018 or fill in the enquiry form on our website.

Setting Up a Charity in the UK and Tax Implications

SETTING UP A CHARITY IN THE UK

There are 6 steps to setting up a charity.

1. Find trustees for your charity

You usually need at least 3. Trustees are responsible for the operation of your charity. They must show they understand their legal requirements.

2. Make sure the charity has ‘charitable purposes for the public benefit’

Your charity must have ‘charitable purposes’ that help the public (known as being ‘for public benefit’).

Charitable purposes include: relieving poverty; education; religion; health; saving lives; citizenship or community development; the arts; amateur sport; human rights; religious or racial harmony; the protection of the environment; animal welfare; the efficiency of the armed forces, police, fire, or ambulance services

You must run your charity in a way that’s consistent with and supports its purposes – and only those purposes. Your charity can have more than one purpose, but it can’t have any purposes that aren’t charitable.

3. Choose a name for your charity

The official name of your charity is known as its ‘main name’. Your charity may also have a ‘working name’ which is another name it uses. Your charity’s main name or working name must not be the same as or too similar to the main or working name of an existing charity and must not be misleading.

4. Choose a structure for your charity.

There are 4 common charity structures and we can help you to choose an appropriate structure for your charity:

Charitable company: Your charitable companies will have to be limited by guarantees rather than shares when you register. Trustees have limited or no liability for a charitable company’s debts or liabilities.

Charitable incorporated organisation (CIO): A CIO is an incorporated structure designed for charities. You create a CIO by registering with the Charity Commission. You do not need to register with Companies House. Trustees have limited or no liability for CIO debts or liabilities.

Charitable trust: A ‘charitable trust’ is a way for a group of people (‘trustees’) to manage assets such as money, investments, land, or buildings.

Unincorporated charitable association: An ‘unincorporated charitable association’ is a simple way for a group of volunteers to run a charity for a common purpose. Unincorporated charitable associations cannot employ staff or own premises.

Your charity must have a governing document which is setting out:

  • its charitable purposes (‘objects’)
  • what it can do to carry out its purposes (‘powers’), such as borrowing money
  • who runs it (‘trustees’) and who can be a member
  • how meetings will be held and trustees appointed
  • any rules about paying trustees, investments and holding land
  • whether the trustees can change the governing document, including its charitable objects (‘amendment provisions’)
  • how to close the charity (‘dissolution provisions’)

As a trustee, you must have a copy of your charity’s governing document. Refer to it regularly because it tells you how to run your charity. For example: how many trustees are needed to make decisions, how to recruit them and how to run trustee meetings; how to look after your charity’s money, land, property, or investments and keep accounts and how to resolve internal disputes.

Register as a charity if your annual income is over £5,000 or if you set up a charitable incorporated organisation (CIO).

TAX RELIEF FOR CHARITIES

As a charity you can get certain tax reliefs. To benefit you must be recognised by HM Revenue and Customs (HMRC). Charities do not pay tax on most types of income as long as they use the money for charitable purposes. You can claim back tax that’s been deducted, for example on bank interest and donations (this is known as Gift Aid).

Your charity may need to pay tax if you’ve:

  • received income that does not qualify for tax relief;
  • spent any of your income on non-charitable purposes; or
  • You need to complete a tax return if your charity has tax to pay.

LEAVING A GIFT TO A CHARITY IN YOUR WILL

You can leave anything you own to charity. There are no restrictions as to what can and can’t be left to charity in your will.

You can donate:

  • a fixed amount
  • an item
  • what’s left after other gifts have been given out ‘residuary estate’
  • Your donation will either be taken off the value of your estate before Inheritance Tax is calculated or reduce your Inheritance Tax rate if 10% or more of your estate is left to charity.

Gifts to qualifying charities are themselves exempt from IHT regardless of the value of the gift. However, if a gift to charity in a Will meets certain conditions, the lower rate of 36% IHT can apply to the taxable part of an individual’s estate.

The reduced rate of 36% applies where the individual leaves at least 10% of their net estate, known as ‘the baseline amount’, to charity. In simple terms, the baseline amount is the entire estate in an individual’s sole name (not including assets held in trust, or joint assets that pass by survivorship) less debts, funeral expenses and certain IHT exemptions – such as the nil rate band, currently £325,000. 

TAX RELIEF ON LIFETIME GIFTING OF LAND OR BUILDINGS TO A CHARITY 

A gift can be made to any approved charity, and you’ll need to contact the charity to ensure it can accept the proposed gift. Once the charity has confirmed it can accept the gift the property can be transferred to it. To claim the tax relief, you obtain a certificate from the charity containing a description of the land or buildings.

You must give the whole of your beneficial interest in a property, which means that you cannot live in it. An individual donor deducts the relief when they calculate their income for the tax year in which they make the gift.

For an outright gift, the amount you can deduct is the value of the net benefit to the charity at the time you give or sell them the qualifying investment, plus any incidental costs (for example brokers fees or legal fees), less any money or the value of other benefits you or a person connected with you (such as a relative or connected company) receive in consequence of you giving or selling the qualifying investment to charity.

Outright gifts and bequests to charity are completely free of Inheritance Tax. You’re not liable to Capital Gains Tax or Corporation Tax on capital gains when you make a gift of assets, such as land or stocks and shares, to charity. Charities do not need to pay Stamp Duty on acquisitions of land or buildings. 

What the recipient charity does with the gift is entirely for the charity to decide. The investments can be sold immediately, or at a later date, and the proceeds used for charitable purposes, or they can be retained by the charity as an investment.

Discretionary Trust

Alternatively, you can leave a cash legacy or share of your estate to a discretionary trust which includes charities as potential beneficiaries. The executors/trustees of your Will would then have the discretion as to how much of the gifted sum should pass to charity. 

They can also decide which charities to benefit. Whilst the executors/trustees will have discretion, you can leave a letter of wishes providing guidance as to which charity or charities you wish to benefit and by how much.

If you need further legal advice on setting up a charity, please contact us at 020 8240 9018 or fill in the enquiry form on our website.

Immigration Health Surcharge (IHS) Cost To Increase By 66%

On 13 October 2023, the UK Government announced a substantial 66% increase in the Immigration Health Surcharge (IHS).  Originally set to take effect from 16 January 2024, since a delegated legislation committee of the House of Commons will be debating the draft Immigration (Health Charge) (Amendment) Order 2023 on Wednesday, 10 January at 4.30pm, the IHS fee increase cannot now be implemented any earlier than 31 January 2024.

What Is the Immigration Health Surcharge (IHS)?

The Immigration Health Surcharge, or IHS, was first introduced on 6 April 2015 to ensure migrants contribute to the cost of healthcare provided by the NHS.

The Immigration Health Surcharge is an upfront cost paid alongside the submission of (most) visa applications so that the individual is entitled to have full access to the National Health Service (NHS) whilst in the UK. There is no limit to how much one can access the NHS. Additionally, there is no option to opt out of the Immigration Health Surcharge even if you believe you will not use the NHS or would prefer to pay for private health care.

The Immigration Health Surcharge is normally applicable to individuals applying for permission to enter the UK for six months or more, or for individuals making visa applications from within the UK for any length of time (with the exception of applications for indefinite leave to remain or for applications to naturalise as a British citizen).

The IHS is charged per year and covers the duration of any visa application applied for.

When Do I Pay the Immigration Health Surcharge?

The Immigration Health Surcharge is applicable when making the online visa application. When you are submitting the online visa application you will be redirected to the appropriate Immigration Health Surcharge payment page. The payable fee will be calculated in accordance with the visa for which you are applying for and will amount to the duration of that visa. Please note that this fee is sometimes rounded up and may therefore be higher than expected.  Additionally, there is no control on the currency exchange rate used. As outlined in the Home Office Exchange Rate Policy, the exchange is normally 4% above the Oanda live bid rates. After the Immigration Health Surcharge is successfully paid you will be redirected back to the online form to pay the application fee. Additionally, you will be sent a confirmation email which includes the IHS reference number.

When Is the IHS Increasing?

Originally set to take effect from 16 January 2024, since a delegated legislation committee of the House of Commons will be debating the draft Immigration (Health Charge) (Amendment) Order 2023 on Wednesday, 10 January at 4.30pm, the IHS fee increase cannot now be implemented any earlier than 31 January 2024.

What Is the IHS Increasing to and Who Is Affected by This Increase?

The details of the Immigration Health Surcharge increase have been confirmed in the Immigration (Health Charge) (Amendment) Order 2023.  The Order needs to be approved by both Houses of Parliament and ratified.

The Immigration Health Surcharge is increasing for students, student dependants, those applying for entry clearance or leave to remain under the Youth Mobility Scheme, and applications made by children under the age of 18 from £470 a year to £776 a year.

For all other relevant immigration categories for entry clearance or leave to remain in respect of persons aged 18 years or over at the date of application the Immigration Health Surcharge is increasing from £624 a year to £1,035 a year. Therefore, when it takes effect, the Immigration Health Surcharge will increase by 66%.

Who Is Not Affected by the Immigration Health Surcharge (IHS) Increase?

There is no IHS for Health and Care workers, visitors, those applying under the EU Settlement Scheme, or for those applying for entry clearance as a Fiance under Appendix FM. Likewise, there is no Immigration Health Surcharge for those claiming asylum or applying for entry clearance or permission to stay under the Ukraine Scheme. Additionally, there is no requirement to pay the IHS for those applying for indefinite leave to remain or for British Citizenship.

Additionally, people who cannot afford to pay the IHS can request a fee waiver if they have credibly demonstrated that they cannot afford the fee.

What Happens if I Do Not Pay the Immigration Health Surcharge?

As stated under paragraph 34(4) of the Immigration Rules, a failure to pay the IHS will result in an invalid application and your application will not be processed. If applying from inside the UK, your application will be rejected within 10 working days, and if applying from outside the UK, your application will be rejected within 7 working days.

Can I Get the Immigration Health Surcharge Refunded?

If you withdraw your application or your application is refused you can apply for a refund of the Immigration Health Surcharge.

Contact Our Immigration Solicitors

For expert advice and assistance in relation to a visa or immigration application, contact our immigration solicitors on 020 8240 9018 or email at ji@jypartnerssolicitors.com.

Returning Resident Visa

If you previously had indefinite permission to enter or stay (settlement) in the UK and this has now lapsed, you may be eligible to return to the UK to settle on the basis of a Returning Resident visa.

An application for a Returning Resident visa must be made from outside the UK.

If your application for a Returning Resident visa is successful, you will be granted entry clearance for settlement in the UK.

Returning Resident Visa Requirements

The requirements that you will need to satisfy in order to be admitted to the UK for settlement as a Returning Resident are:

  • You are outside the UK;
  • You were previously granted settlement in the UK;
  • Your previous settlement in the UK has lapsed due to your absence from the UK;
  • You genuinely intend to return to the UK for the purpose of settlement;
  • You have maintained strong tries to the UK during your absence from the UK;
  • You did not receive public funds towards the cost of leaving the UK (unless applying under the Windrush Scheme);
  • Your application does not fall for refusal under the general grounds for refusal;
  • You have a valid TB certificate, if required;
  • If under 18, you have written consent from either both parents, one parent (if that parent has sole legal responsibility for you) or a legal guardian.

The exact requirements you will need to satisfy in order to qualify for a Returning Resident visa may vary depending on your personal circumstances.  You may want to speak to an immigration lawyer for expert advice.

When does indefinite leave to remain or settlement in the UK lapse?

Your indefinite leave to remain will have automatically lapsed by operation of law if you held ILR status but were subsequently absent from the UK for a continuous period of:

  • More than 2 years under the Immigration (Leave to Enter and Remain) Order 2000; or
  • More than 5 years, if you previously had settlement in the UK under the EU Settlement Scheme; or
  • More than 4 years, if you previously had settlement in the UK under the EUSS as a Swiss national or a family member of a Swiss national.

Does a Returning Resident need to have had indefinite leave to enter or remain when they last left the UK?

There is no requirement that an applicant had indefinite leave to enter or remain in the United Kingdom when they last left the UK. Therefore, it remains possible to make an application for a Returning Resident visa even if you visited the UK since your leave lapsed.

How can I demonstrate that I have maintained strong ties to the UK?

As part of your Returning Resident visa application, when assessing whether you have maintained strong ties to the UK during your absence from the UK, the Home Office will consider the following:

  • Your family ties in the UK;
  • Your property and business ties in the UK;
  • The length of your original residence in the UK;
  • The length of time you have spent outside of the UK;
  • Your reasons for leaving and wishing to return to the UK; and
  • Any other circumstances.

Home Office guidance also acknowledges that there ‘may be other compelling or compassionate circumstances’ and confirms that each application ‘must be considered on its individual merits’. Given the various factors, and the discretionary nature of the assessment, you may wish to seek legal advice when considering the evidence that you may wish to rely upon and how best to present it.

Can a Returning Resident be accompanied or joined by a dependent?

Returning Residents cannot automatically bring or be joined by a partner or children on this route. Each family member must qualify as either a Returning Resident, or in some other capacity, in their own right. You will therefore need to consider potential applications that a partner or children may be able to make. You may wish to seek legal advice in this regard.

What if my Returning Resident visa application is refused?

If your application for a Returning Resident visa is refused, there is no right of appeal, but the decision may be open to being challenged by way of an application for Administrative Review.

What if I cannot satisfy the requirements for a Returning Resident visa?

In the event that you cannot meet the requirements to enter the UK as a Returning Resident, but you have previously spent a continuous period of 10 years lawfully in the UK, you may be able to enter on another basis and then submit a Long Residence application.

How Our Immigration Solicitors Can Help

Our immigration team regularly assists foreign nationals whose previous indefinite leave to enter or remain has now lapsed and who now wish to settle in the UK as Returning Residents.

Whether you require expert advice on the requirements of the Immigration Rules for Returning Residents, an independent assessment of your prospects of qualifying for a Returning Resident visa or professional assistance with preparing a Returning Resident visa application or Administrative Review, our immigration solicitors can help.

We pride ourselves on being approachable and proactive in understanding and meeting our clients’ needs. We are a highly driven team, dedicated to providing clear and reliable immigration advice to Returning Residents as part of a professional and friendly service.

Please contact us at 020 8240 9018 or ji@jypartnerssolicitors.com.

We are hiring!

JY Partners Solicitors are hiring the following professionals now!

  1. Immigration solicitor with 3-5 years PQEs
  2. Conveyancing solicitor/conveyancer with clients following

Working conditions (i.e., salary, working hours, annual leaves, etc) are negotiable.

Please submit your CV to info@jypartnerssolicitors.com.

Successful candidates are required to go through DBS and Reference checks before joining us.

We look forward to seeing as many applications as possible!

HR Team, JY Partners Solicitors