The Foreign Element By Michael Considine


It is relatively normal for UK domiciled individuals to hold both UK and foreign assets; be it a second home in Spain or an investment portfolio with shares in foreign companies. However, advance


planning is needed to avoid complications on death when inheriting foreign assets.


The executors will need to prove their authority. In England and Wales, this involves obtaining a Grant of Probate from the Probate Registry; but for foreign assets, the re-sealing or recognition of a Grant already issued in another jurisdiction, may be required. A Grant of Probate obtained in Scotland or Northern


Ireland, on the basis of the deceased’s domicile there, can be recognised as if it were a Grant issued in England and Wales. Similarly, legislation permits the re-sealing of Grants made in former British colonies such as South Africa and parts of Canada and Australia, and these can be used to transfer assets in England and Wales without the need for a separate Grant of Probate here, saving time and costs. If a foreign Grant cannot be resealed or recognised in the UK, then a separate Grant of Probate will be needed. Likewise, if there is no foreign Grant (or equivalent), a probate application is likely to be needed in the country concerned. We have links with firms in a wide range of jurisdictions to assist when an estate has a foreign element. The problems we often encounter in this area highlight the importance of taking advice in respect of foreign assets when drafting your Will so as to keep probate as simple as possible; this may include making a separate foreign Will or, for EU assets, electing (where appropriate)


for English law to apply. mconsidine@wedlakebell.com


Wedlake Bell’s Private Client Group comprises the Residential Property, Family and Private Client teams. The Family department is a relative newcomer, having recently celebrated its five-year anniversary, while the Residential Property team, incorporating development and investment work has been in existence for ten years. The Group works closely with the rest of the firm on a variety of matters from setting up corporate structures, company secretarial services, employee benefits and brand protection, to setting up and running family offices and family investment companies.


This publication is for general information only and does not seek to give legal advice or to be an exhaustive statement of the law. Specific advice should always be sought for individual cases. Wedlake Bell LLP is a limited liability partnership and is incorporated in England and Wales with registered number OC351980. It is regulated by the Solicitors Regulation Authority. Its registered office and principal place of business is at 71 Queen Victoria Street, London EC4V 4AY. A list of members may be inspected at this address. The term ‘Partner’ is used to refer to a member of Wedlake Bell LLP. © Wedlake Bell LLP November 2016. No part of this publication may be reproduced in any material form without the written permission of Wedlake Bell LLP except in accordance with the provision of the Copyright, Designs and Patents Act 1988. This reflects the law as at the date of publication December 2016.


Ask Ollie...


Senior Associate Oliver Embley answers all your questions


Question:


Can my company shares or land I own reduce my IHT bill?


To stop the breakup of viable businesses because of high rates of taxation, HMRC offer inheritance tax (“IHT’’) relief on the value of a person’s business assets on death known as ‘Business Property Relief’ (“BPR’’). BPR allows the executors to claim either 50% or 100% IHT relief on a share in a business, unquoted company shares, shares listed on AIM and land, machinery or plant used for the purposes of a business, provided each has been held for more than two years before death.


BPR will only apply to ‘trading’ businesses. It does not apply to investment companies, property businesses, companies who make or hold investments or (very broadly) interests in businesses which are listed on a recognised stock exchange.


A ‘top tip’ is to check whether you hold (or want to hold)


any shares in AIM listed companies in your investment portfolio. If so, they should qualify for BPR after two years.


There is a similar relief from IHT for agricultural land situated in the UK or (currently) the European Economic Area known as ‘Agricultural Property Relief’ (“APR’’). If land is used for the purposes of agriculture, this relief will reduce the amount of IHT on the agricultural value of the land by either 50% or 100%.


Agricultural land includes woodlands, farm buildings used for farming (i.e. sheltering livestock), cottages and farmhouses occupied for the purposes of agriculture. If you own agricultural property, it is worth checking whether it will qualify and if not, what planning you could carry out. For instance, if you own a farmhouse and land farmed by someone else, the land may qualify but the farmhouse and garden may not if they are not occupied for the purposes of farming the land.


BPR and APR are valuable tax reliefs and doing some housekeeping now will save your executors administrative headaches when winding up your estate. oembley@wedlakebell.com


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