INHERITANCE TAX – NIL RATE BAND

Each individual has a Nil Rate Band for Inheritance Tax purposes i.e. the proportion of their estate on death which is free of Inheritance Tax. The increase to £350,000 from 5th April last has been delayed and the Nil Rate Band is frozen at the current rate of £325,000 as a direct result of the financial crisis currently engulfing the nation’s finances.

The advent of the Transferrable Nil Rate Band came in 2007 and is the most significant change to Inheritance Tax for some years. If the Nil Rate Band is not used on the first death of a spouse or civil partner with the whole estate passing to the surviving spouse or civil partner then on the death of the surviving spouse or civil partner the first Nil Rate Band can be transferred giving currently, estate of £650,000 which would not be subject to Inheritance Tax. Under the pre 2007 rules the first Nil Rate Band would have been lost.

In addition, the new rules allow the use of a proportion of the Nil Rate Band where the first Nil Rate Band was partly used up. There is also no time limit and the Nil Rate Band will transfer if it can be proved that the whole estate passed to the surviving spouse or civil partner from where this occurred many years before. The other major benefit of these provisions is that the Nil Rate Band which is transferred is at the Nil Rate Band figure current at the date of the second death. For a death now the Nil Rate Band would be £325,000  but in ten years time it might be £500,000 when the second spouse or civil partner dies. The Transferrable Nil Rate Band added to the Nil Rate Band available on the second death would be 2 x £500,000 and not £500,000 + £325,000.

For further information on the way in which the new rules work and the documents which need to be retained to ensure that the transferrable nil rate band can be efficiently claimed contact Douglas Lamond, Contact Me

The Effect of the Volcanic Ash Absences

Your Guide to “No Fault” Absences in the Workplace in General

 

The ongoing saga of employees being stranded and unable to return to work indefinitely or being delayed has raised an important concern for both employers and employees. 

 

Should these employees be paid for the days when they were unable to return to work through no fault of their own?

 

What the Law Says

1. It is the responsibility of the employee to get to work
2. An employee must be ready and willing to work in order to receive payment

 

Strictly speaking, by failing to return to work, an employee has taken unauthorised leave and as such, an employer may be within their rights to refuse payment for those absent days unless the Contract of Employments states otherwise.  However automatically docking employees’ wages may not be the best solution.

 

Alternative Options

1. An employer may pay the employee as normal or
2. An employer and employee can agree that the employee takes additional annual leave or unpaid leave to cover the absence.
3. Alternatively, there may be circumstances where the employee can still perform some of their duties whilst absent i.e. work remotely if they have the necessary equipment, for example a laptop.
4. The employer may request the employee make up the time at a later date.

 

Business Trips

It may be that employees are stranded or delayed returning from a work-related trip.  In this scenario, the employee has a good argument that they should not suffer loss because the trip was part of fulfilling their employment obligations.  It is recommended that employers develop a separate and lenient policy in these circumstances. 

 

Practical Points for Employers

1. Check your contracts of employment:

1.  
   1. To determine whether there are any clauses relating to ‘no fault’ absences.
   2. To ascertain any liability for additional expenses incurred if the trip is work-related

1. Although the circumstances of each employee may be different as the length of absence varies, it is extremely important to keep a consistent policy to avoid employee grievances and/or discrimination claims.
2. Discuss the options fully with the employee.
3. Consider remote working.
4. Consider the morale of the staff and the effect of docking wages if this is the preferred option.

 

Practical Points for Employees

1. Keep in regular contact with your employer to update them of the situation
2. Where possible, work remotely.

 

These guidelines are also applicable in other circumstances preventing employees attending work such as severe weather or disruption to public transport.