Month: July 2020

Where there’s a will there’s a new way of witnessing it

The law covering how a will can be witnessed in England and Wales is just about to be updated to include the virtual electronic witnessing of wills, in certain circumstances.

This is as a direct result of the lockdown caused by Covid-19. Backdated to January 2020, the new law allows anyone who has been isolating or shielding, and who has access to video software such as Zoom or FaceTime, to get their signature on their will remotely witnessed online. 

The original Wills Act of 1837 stipulates that wills need to be witnessed in the ‘presence of’ at least two witnesses. This has proved to be almost impossible to do properly during lockdown, with many solicitors not having access to offices in order to arrange suitable appointments to witness signatures.

This recent amendment means that the established case law, that allows a witness to observe the signing through a window or door as long as they are in clear view, now extends to live video streaming, just as long as all parties can clearly see and hear what is taking place. 

Under the Electronic Communications Act 2000, a statutory instrument will be enacted in September 2020 stating that the existing phrase ‘in the presence of’ now means either in the physical presence of, or in the virtual presence of (via video link).

Virtually starting the year again

The amendment to the law will be backdated to 31 January 2020, in order that it covers all wills made during the pandemic. It will also be in place up to 31 January 2022, or longer if it is felt necessary to do so. 

However, the Government are also reserving the option to shorten the term too. Once the law reverts back to traditional forms of witnessing, then that will once again have to be performed by someone who is physically (and not virtually) present. 

A last resort

As welcome as it is, this change in the law should only be viewed as a last resort. With remote witnessing being used only once all other physical witnessing options have been explored and found to be impossible. 

Where remote witnessing does take place, then strict precautions must be in place to ensure that fraud and coercion are not present. The witnesses must understand what it is that they are observing and they will not be able to ‘witness’ a pre-recorded video of a will signing.

The Ministry of Justice states that testators (those making a will), when getting it witnessed remotely should make a formal statement such as “I (first name & surname) wish to make a will of my own free will and sign it here before these witnesses, who are witnessing me doing this remotely”

All signatures must all so be ‘wet’ as remote electronic signatures are unacceptable.

If possible, the video stream should also be recorded and kept as a record of events.

Socially distanced alternatives to video technology

As The Ministry of Justice have stated that ‘people must continue to arrange physical witnessing of wills where it is safe to do so’. With that in mind, they suggest that that witnessing wills in the following ways are an acceptable execution of the legal requirement during the pandemic, provided that the testator and witness each have a clear line of site:   

  • Witness through a window, or open door of a house or vehicle
  • Witness from a corridor or from an adjacent room into another room through an open door
  • Witness outdoors, from a short distance.

All wills still need to be signed by two witnesses who are not beneficiaries and please keep in mind that electronic signatures are unacceptable.

The longer-term future

The Government has committed to considering ‘wider reforms to the law on making wills’. In the meantime this concession regarding the witnessing of wills during the restrictions imposed by the pandemic should go someway to helping relieve the stress associated with creating or amending bequeathments during lockdown.

In Scotland the law has also been temporarily amended to allow a lawyer to act as a witness via a video conference, just as long as they are not appointed as an executor, either directly or through a trust.

As always, we at Bridgewater Financial Services are here to provide expert and independent advice on any questions you have regarding making a will, Inheritance Tax Planning or any other financial enquiries you may have.

You can also see full the guidance on making wills via video conferencing in England and Wales by visiting GOV.UK. 

 

A New Deal For Britain..

.. a massive opportunity for your SSAS Pension.

There are some remarkable changes coming our way with regard to planning and building permissions for the conversion of commercial property to residential.

As we all know your small self-administered pension scheme (SSAS) is an ideal vehicle to purchase, develop and own commercial property; with some remarkably advantageous ways of funding potential purchases of commercial properties.

We also know that your SSAS isn’t allowed to hold residential property, but did you know that it is allowed to pay for any conversion from commercial to residential?

Meaning that, you can purchase commercial property with your SSAS, flip it to residential and develop it within the SSAS. Just as long as the property is removed from the SSAS Pension BEFORE it becomes habitable. For the avoidance of doubt, ‘habitable’ is defined as the point of which the certificate of habitation / completion is issued.

There are some VERY BIG changes coming to commercial property planning restrictions

In order to get the economy moving again, the Prime Minister has announced his ‘New Deal For Britain’. Within it are some remarkable opportunities for companies to utilise the power of their SSAS pensions, by developing commercial property for residential sale.

This September, we will see some of the biggest changes in planning regulations that have ever impacted upon the commercial property market.

If you have a SSAS pension, you could be perfectly placed to take full advantage of these. As of September this year a reform of the current system will introduce the following changes:

  • A vast amount of existing commercial property will be allowed to change its use to residential without the need for a planning application
  • Land and existing commercial buildings in town centres can change use without planning permission
  • Planning permission will no longer be required for the demolition and rebuild of vacant and redundant residential and commercial buildings, as long as they are rebuilt as homes
  • Commercial premises, including vacant shops, can be more easily swapped to residential housing
  • Far more types of commercial units will have the flexibility to be repurposed through the reform of the User Class Order.

This is a fundamental changing of the rules around converting commercial property to residential and this can be done advantageously through the use of your SSAS pension.

However the rules governing what you can and can’t do must be closely followed, or you’ll run the risk of exposing the SSAS to draconian taxes on the profits that your property dealings create.

To avoid unwanted taxes there are a few simple things you can do to ensure that things go as smoothly and as tax efficiently as possible:

  • Make sure that your SSAS sells the property to a cash buyer prior to the conversion to residential completing. This means that the completion then takes place outside of your SSAS
     
  • You can leave the capital appreciation inside the SSAS and avoid Capital Gains Tax if existing SSAS members, or a sponsoring company, purchases the incomplete property form the SSAS at market value. They can then finish the project and sell it, paying only the stamp duty and legal costs
  • The SSAS can even sell the uncompleted property subject to a deferred consideration contract. This way the property is removed from the SSAS before completion, but the buyer doesn’t have to pay the full purchase price over until the conversion is complete and they can then apply for a mortgage
  • A great way of ensuring that any property in question qualifies as a genuinely diverse commercial vehicle, and therefore unaffected by the normal residential property rules, is for a number of independent SSAS’s to come together in order to carry out bulk projects
  • Another way to not get taxed for converting or building is simply don’t convert or build. A SSAS can buy and demolish commercial property and then sell the land to a developer for a commercial gain
  • You can also take advantage of any 12 month loan window available by getting the SSAS to lend up to 50% of the funds value in order for the sponsoring company to purchase or convert the property; and repay the SSAS upon the completion of the sale.

There are all sorts of opportunities to take advantage of these coming changes with a SSAS Pension. If you don’t currently have one, then perhaps now’s the right time to convert an existing scheme to a SSAS, or set one up.

Whatever you are thinking, now is the time to act as it can take up to three months to get a new SSAS registered by HRMC. Especially as many of their staff have been moved to other departments in order to handle the furlough scheme.

If you are thinking about setting up a SSAS, in order to take advantage of these new changes in property legislation when they kick-in in September, then please get independent and professional advice.

Doing things right from the very start will save an awful lot of hassle and expense further down the line. Especially with something as complex as a SSAS Scheme, where the wrong advice, or no advice at all, could result in significant tax penalties.

As always, we at Bridgewater Financial Services are here to provide expert and independent advice on any questions you have regarding a SSAS pension, or any other financial enquiries you may have.