Changes to the Probate Application Process for Deaths on or after 1 January 2022

Insights

On 1 January 2022, The Inheritance Tax (Delivery of Accounts) (Excepted Estates) (Amendment) Regulations 2021 came into effect. The 2004 regulations were extended, so that the majority of non-taxpaying estates are no longer required to complete IHT forms in cases where a grant is required.

The new regulations serve to minimise the administrative burdens imposed on those dealing with IHT, by reducing the reporting requirements for excepted estates and limiting the circumstances in which full inheritance tax accounts must be delivered to HMRC. The new regulations, however, will only apply to estates or deaths that occur on or after 1 January 2022.

What are the main changes to the regulations?

1. Requirement to file IHT accounts

If you act for a person domiciled in the UK who dies on or after 1 January 2022 with an excepted estate (one in which no IHT is due), you are no longer required to submit an IHT205 form (and, if applicable, an IHT217 form) to HM Courts and Tribunals Service (HMCTS) as part of your probate application.

2. Monetary limits have been increased

Small estate

A small estate is one where the gross value is less than the IHT threshold. The value limits in relation to trust property (e.g. where the deceased was a beneficiary of a trust) and specified transfers (e.g. where the deceased made a gift in the seven years preceding their death that failed and became chargeable to IHT) has been increased from £150,000 to £250,000.

Exempt estate

Exempt estates have a gross value that exceeds the IHT threshold, but a net value that does not exceed after accounting for liabilities, exemptions and/or reliefs. As above, the value limits for both trust property and specified transfers have been raised to £250,000. However, the total value of trust property, including exempt amounts, is capped at £1 million. Furthermore, the gross estate limit for an exempt estate has been increased from £1 million to £3 million. This means that if the estate is less than £3 million in value and all assets above the IHT threshold pass to a spouse/civil partner/charity, the personal representatives (PRs) can apply to the probate registry for the grant without first submitting a form IHT400 to HMRC.

3. The reporting requirements have been reduced

Since the information required by HMRC for those who are UK domiciled has been significantly reduced, PRs are now only required to provide the following as part of the probate process: the deceased’s full name and date of death, whether they are claiming a transfer of the unused nil rate band of a pre-deceased spouse/civil partner; and the estate’s gross value, net value and net qualifying value.

What are some of the other changes brought about by the new regulations?

Qualifying non-domiciled estates:

A non-domiciled estate is an estate where the deceased was never domiciled in the UK. The regulations make it clear that an estate does not qualify as an excepted estate, and so there is a requirement to submit the full IHT400 report to HMRC, where the deceased owned indirect interests in UK residential property through a close company or partnership, or if the deceased made any chargeable gifts of UK assets totalling more than £3,000 in the seven years preceding their death.

The IHT threshold definition:

The definition has been extended to include cases where only a portion of the available nil rate band was used when the first spouse/civil partner died, and a claim is made to transfer the unused portion to the estate of the surviving spouse/civil partner. This means that PRs will no longer be required to use the IHT400 route if the entire nil rate band is not available for transfer.

Time limits:

The deadline for HMCTS to provide the necessary information to HMRC has been extended to one month. The time limit for HMRC to request additional information from the PRs has also been increased, from 35 days to 60 days.

What does this mean for you?

If there is no inheritance tax to pay (i.e. the estate is small or exempt), and the person dies on or after 1 January 2022, you do not need to report the value of the estate to HMRC as part of your probate application.

If there is inheritance tax to pay (i.e. the estate is not excepted), and the person dies on or after 1 January 2022, you will need to fill in and file an IHT400 and IHT421 with HMRC, and wait 20 working days before you can apply to the registry for probate.

When should you seek legal advice?

While these changes are welcomed, applying for probate and administering an estate can still be a time-consuming and difficult process for bereaved families. Our private solicitors can guide you through the process and provide advice on complex matters where IHT is payable, trusts are in place and/or assets are located overseas. Furthermore, our experts can assist PRs with their duties and advise on the potential risks associated with estate administration such as missing assets.

Employment Law: What to Expect in 2023

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There are 10 developments that might shape the employment law landscape this year and beyond.

1. Retained EU Law

The Retained EU Law (Revocation and Reform) Bill could result in the most significant shake-up of employment law in a generation. If brought into law, all retained EU law must be expressly transferred into UK law by 31 December 2023, or it will cease to be law in the UK. The Government may yet extend the deadline for implementation to 23 June 2026, the 10-year anniversary of Brexit. Little is known about the Government’s intentions for employment-related law. This could impact familiar legislation such as the Working Time Regulations 1998, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), and Agency Worker Regulations.

2. Flexible Working

The Government has recently published its consultation response on “Making Flexible Working the Default”, giving its support to the Employment Relations (Flexible Working) Bill. Amongst other things, the Government supports the following measures: giving workers the right to request flexible working from day one of employment, removing the present 26-week qualifying period; requiring employers to consult with their employees before rejecting their flexible working request; allowing employees to make two flexible working requests per year; and requiring employers to respond within two months.

3. Family Leave and Pay

The long-anticipated Employment Bill first mentioned in December 2019 appears to have dropped off the Government’s agenda. Instead, elements of the original Bill are found in several Private Members’ Bills which have received Government backing:

  • The Protection from Redundancy (Pregnancy and Family Leave) Bill extends the rights of protection from redundancy for women during or after a protected period of pregnancy. It is thought this will cover the moment they inform their employer in writing of their pregnancy to six months after they have returned from maternity leave. Enhanced protection is also proposed following a return to work after shared parental leave and adoption leave.
  • The Carer’s Leave Bill entitles employees who are providing or arranging care to one week’s unpaid leave per year and protection from dismissal or detriment as a result of having taken time off.
  • The Neonatal Care (Leave and Pay) Bill provides parents with a new right to paid time off if their baby requires neonatal care.

It is also expected that the Miscarriage Leave Bill and the Fertility Treatment (Employment Rights) Bill will progress, providing a right to paid bereavement leave and paid time off for fertility treatment respectively.

4. Protection from Harassment

The Worker Protection (Amendment of Equality Act 2010) Bill includes a new proactive duty on employers to take reasonable steps to prevent sexual harassment of their employees and makes employers liable for harassment of their employees by third parties.

5. Strikes

The second half of 2022 resulted in strikes across many sectors including rail, mail, and nursing and that pattern continues at the start of 2023. On 5 January 2023, the Government announced proposed ‘strike laws’ to ensure minimum service levels for fire, ambulance and rail services, with the possibility that other sectors such as health and education could face similar action if they do not reach voluntary agreements. A copy of the draft Bill and information on its progress can be found here.

6. Human Rights

On 22 June 2022, the government introduced the Bill of Rights Bill 2022-23 to Parliament. The Bill aims to repeal the Human Rights Act 1988 and to create a new domestic human rights framework. Although it was shelved by Liz Truss’ government, it is reported that it is back on the agenda and will continue its parliamentary passage in 2023, though the Government has not committed to a parliamentary timetable.

7. “Fire and Re-hire”

In light of the mass dismissals involving P&O Ferries, in March 2022 the Government announced that a new Statutory Code on dismissal and re-engagement (so-called “fire and re-hire”) would be published. A draft copy of the Code of Practice was published this week (on 24 January 2023), and the government is consulting on it for 12 weeks until 18 April 2023. The draft Code sets out employers’ responsibilities when seeking to change contractual terms and conditions, including requiring employers to “consult with employees in a fair and transparent way”. It will also allow tribunals to apply an uplift of up to 25 per cent on employee compensation where the code applies and has unreasonably not been followed. The consultation document and information on how to respond can be found here.

8. Data Protection

The Government has announced its intention to replace the UK GDPR with a British data protection system in the form of a Data Protection and Digital Information Bill and a further update is expected in 2023. In the meantime, the ICO is currently undertaking two consultations (closing this month), one about monitoring workers and one about processing workers’ health data. These are part of an ongoing project to replace the ICO’s employment code of practice with new guidance to help employers understand their responsibilities under data protection law. The aim is to create a one-stop hub where employers and employees can find answers to their data protection questions.

9. The Future of Work

On 1 September 2022, Matt Warman MP published his response to the Prime Minister’s Future of Work review. He invited the Government to consider four areas in greater detail: artificial intelligence and automation, skills, place and flexibility, and workers’ rights. It is understood that Government departments will now consider the issues he raised in more detail, though no timeline has been proposed.

10. Holiday pay

Hot on the heels of the landmark decision of Harpur Trust v Brazel, the Government has launched a consultation on calculating holiday entitlement for part-year and irregular hours workers. In a nutshell, the Government is proposing a reversal of the conclusions reached in Harpur Trust and, if implemented, would permit employers to revert to pro-rating holiday for part-year workers based on a 12.07 per cent method.

Another holiday pay claim was also heard in the Supreme Court at the end of last year, and in 2023, we anticipate the outcome of Chief Constable of the Police Service of Northern Ireland v Agnew. This Supreme Court was asked to decide whether historic holiday pay claims can be brought where there are gaps of three months or more between periods of underpayment if the underpayments can be linked to form a series. An employee-friendly ruling could result in employers facing a greater exposure to historic underpaid holiday pay.

Upper Tribunal Considers Extended Family Members and the EU Settlement Scheme

Insights

The case of Batool and Others (other family members: EU Exit) [2022] promulgated on 19 July 2022 relates to the position of ‘other family members’ under the EU Settlement Scheme (EUSS). It is one of the first published decisions relating to issues arising under the EUSS.

The headnote in Batool and Others reads: 

(1) An extended (oka other) family member whose entry and residence was not being facilitated by the United Kingdom before 11pm GMT on 31 December 2020 and who had not applied for facilitation of entry and residence before that time, cannot rely upon the Withdrawal Agreement or the immigration rules in order to succeed in an appeal under the Immigration (Citizens’ Rights Appeals) (EU Exit) Regulations 2020.

(2) Such a person has no right to have any application they have made for settlement as a family member treated as an application for facilitation and residence as an extended/other family member.

Legal Background to the Case of Batool and Others

Family members and Other/ Extended family members 

Directive 2004/38/EC (relating to the Free Movement of EU citizens and their family members) provides for two categories of ‘family member’.

‘Family members’ are defined as a spouse or civil partner, direct descendants under the age of 21 or who are dependants of the EU citizen of their partner, and dependent direct relatives in the ascending line of the EU citizen or their partner. Family members enjoy an automatic right of entry and residence.

‘Other family members’ are dependants or members of the household of the EU citizen, or those who strictly require personal care due to serious health grounds. Durable partners also fall within this category. When considering ‘other family members’ the Member State must ‘undertake an extensive examination of the personal circumstances and shall justify any denial of entry or residence to these people’. It must ‘facilitate entry and residence’ for such persons, but there is no automatic right of entry or residence, or obligation to grant entry.

The 2016 EEA Regulations which implemented the Directive, referred to ‘other family members’ using different terminology – ‘extended family members’. Once a person had made an application and been considered to meet the relevant criteria through the issue of a residence card, they were to be treated as a ‘family member’, which would continue as long as they continued to meet the underlying criteria.

The Withdrawal Agreement 

The Withdrawal Agreement made provisions in relation to the rights of citizens and their family members following Brexit. It also allowed States to introduce ‘residence schemes’ requiring an application to be made to enable them to continue to reside in the relevant Member State following Brexit. The UK introduced the EU Settlement Scheme for this purpose.

Article 10 sets out the personal scope of the Withdrawal Agreement i.e. the categories of people that would be able to continue to live in the UK after Brexit. This includes ‘family members’ (as defined in Article 10(1)(e)) and in Article 10(2) persons falling under the definition of ‘other family members’ at Article 3(2) of the Directive provided that they ‘have applied for facilitation of entry and residence before the end of the transition period, and whose residence is being facilitated by the host State in accordance with its national legislation thereafter’.  

Factual background in the Batool and Others Case

The four Appellants were all minors at the date of application and applied under Appendix EU (Family Permit) to join a Romanian citizen in the UK. The applications were sponsored by Persida Sultan, their aunt through marriage to their paternal uncle Zahoor Sultan.

The Appellants are two sets of siblings. Their mothers lived separately in Pakistan with their own families and their fathers were also living separately. The Appellants were living with their paternal grandparents and were cared for by them.

Their grandparents successfully applied for EUSS Family Permits, as the dependent direct relatives in the ascending line of the Spouse (Zahoor Sultan) of a relevant EEA citizen (Persida Sultan). They travelled to the UK on 17 July 2020 and in their absence a local woman was employed to look after the Appellants. The grandparents returned to Pakistan on 21 December 2020.

The children’s applications, made on 03 February 2020, were refused on 20 February 2020, as they did not meet the definition of ‘family member’ within Appendix EU(Family Permit).

Commentary on Batool and Others

The Appellants in this case had several opportunities to make applications for  EEA Family Permits pursuant to the 2016 EEA Regulations as ‘extended family members’ prior to the deadline – at the time of making their applications for EUSS Family Permits, and upon receipt of the refusal decisions (and the 7-8 month period after this, which they instead spent lodging an appeal and awaiting the hearing). The Home Office would then have been obliged to undertake an ‘extensive examination’ of their personal circumstances in deciding whether or not to facilitate their entry and residence to the UK.

The fundamental issue was that they made the ‘wrong’ application and attempts to rely directly on the Withdrawal Agreement, or on human rights arguments more generally failed. This cannot now be resolved as the deadline for extended family members to apply under the EEA Regulations has now passed (31 December 2020). This route is now closed.

The principle established applies equally to other types of ‘extended family member’ which also includes ‘durable partners’. However, due to how this is defined, there may be other options still available to this type of extended family member.

Contact our Immigration Solicitors

To discuss your application or appeal in relation to the EU Settlement Scheme, please contact our immigration solicitors on 020 8240 9018 or via the enquiry form on our website.