Where there’s a will there’s a way
The intestacy rules in England and Wales have been changed.
These are the rules that govern what happens to a person’s estate if they die without making a will. Over half the adult population have not made a will so this is an important change. The changes do not apply to the Scottish intestacy rules.
The new rules introduced in October tend to benefit a surviving spouse or civil partner and vary according to whether or not a couple have children.
- Where there are no children, the rules now say that the surviving spouse or partner should receive all of the deceased person’s estate outright. Previously, they would have received the first £450,000 plus half the remainder – and the other half would have been divided between the deceased person’s other relatives.
- If there are children, the surviving spouse or partner will receive the first £250,000 of theestate, plus half of the rest of the estate absolutely – and the other half will go to the children. Previously, the surviving spouse or partner was only entitled to the income for their lifetime from their half of the estate. After the surviving spouse’s or partner’s death, the children, would have eventually received the capital.
The other main intestacy rules remain broadly unchanged; so, for example, if a person dies with no
surviving spouse or partner, the children will receive all their estate. Where there are no children, the estate will pass to the deceased’s parents. However, step-children and step-parents do not qualify as children and parents for the purposes of these intestacy rules.
The intestacy rules are unlikely to be good enough for many people because families have many different needs. In particular, the update does virtually nothing to address the situation of cohabiting couples. Unmarried couples have no automatic inheritance right to their partner’s estate, even if they have children. Legislation to give rights to unmarried couples has been drafted, but it will not be enacted during the current parliament.
Many people might think that their estate is too small to worry about making a will, but with recent
increases in property values this may have changed – especially as a much greater share now goes to a spouse or partner rather than to children. Inheritance tax is also an important issue. Making a will can help with tax planning and we are here to advise you.
Employment law makes waves
Some overtime pay now has to be included in most holiday pay, following an Employment Appeal Tribunal decision in November 2014. Under the previous rules, it was only necessary to take basic pay into account when calculating holiday pay.
This follows an earlier ruling by the Court of Justice of the European Union (CJEU) that holiday pay should include commission and other elements of contractual variable pay such as shift allowances.
That case involved a salesman who received a basic salary plus variable commission, which made up about 60% of his total remuneration. He therefore suffered financial hardship as a result of taking a holiday because he could not earn any commission while he was away from work. The CJEU said that the purpose of holiday pay is to put workers in the position they would have been if they had been at work.
The tribunal ruled that holiday pay should include pay for non-guaranteed overtime; this is overtime that an employee must work if asked, but which the employer does not have to offer them. It is not clear whether the ruling covers voluntary overtime – which the employee can refuse.
There is a complication because the decision only applies to the four weeks (20 days) of paid annual leave that employers have to provide under the Working Time Directive. Employers are still allowed to make payments at the lower, basic pay rate for the eight days of additional leave required under the Working Time Regulations 1998. This overturned an earlier decision that employees could choose which days would be covered by the Working Time Directive.
Employees must make their claims for the extra holiday pay that they may be owed within three months of the underpayment of holiday pay, and there may be limits on the amounts of their claims for back pay. Employees will have to bring their claims quickly to avoid being time barred.
Future holiday pay arrangements
Employers should consider how they should calculate employees’ holiday pay in future. Although there would be some cost saving, it may be awkward and inconvenient to pay a higher rate for the first four weeks of holidays than for subsequent days.
One way to reduce the increased cost of holiday pay in the future might be to reduce the amount of overtime that they require employees to work.
Let us know if you need our guidance.
In this edition
Advisory fuel rates reflect fall in oil prices
Coded out debt
Restrictive covenants on employment contracts
The mansion tax debate continues
VAT and new rules for digital services
This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice as at 5 January 2015.