In this regular column, Solicitor Abigail Pearson gives five top tips on a range of Private Client topics.
Returning to international mobility
As a result of the Covid-19 pandemic, many people found themselves temporarily stuck in the UK due to travel restrictions. With these now slowly lifting, people are increasingly able to return to their homes abroad and/or work overseas again. Below are some estate planning top tips for the internationally mobile in the post-pandemic world.
1. Keep count of days spent in the UK.
Anyone who has stayed in the UK longer than anticipated may have unintentionally become UK tax resident. The UK applies a statutory residence test, part of which looks at the number of days an individual has spent in the country.
2. Check whether any enforced UK residence during “lockdown” can be disregarded.
Up to 60 days spent in the UK caused by “exceptional circumstances” can be disregarded for UK tax residence purposes, but there are specific conditions to fulfil and evidence will be needed so record-keeping is vital.
3. Check that any overseas companies are not inadvertently brought within the UK tax net.
If you are a director or have a central role in an overseas company and you spend time in the UK, you will need to take care that the company does not become subject to UK corporation tax. This can happen if actions in respect of the company are taken in the UK such that it is deemed to be “centrally managed or controlled” here or to have acquired a permanent establishment, branch or agency here.
4. Check that you have a Will in place for all assets.
If you have a home abroad, take advice as to whether your UK Will should cover this, or whether a Will in the jurisdiction concerned is more appropriate. If the property is in the EU, it is often favourable for UK nationals to have a UK Will to cover this with appropriate wording to allow the law of the individual’s nationality to apply to its succession.
5. Ensure you have a Power of Attorney in place for assets in all jurisdictions.
For UK assets, a Lasting Power of Attorney (“LPA”) allows decisions regarding finances and/or health and welfare to be made by an appointed “attorney” in the event that you lose mental capacity. If you have foreign assets, you should check whether your UK LPA will be recognised in the relevant jurisdiction, and otherwise take local advice on making an equivalent foreign Power of Attorney.