NB: While these Guidance Notes do not form part of STEP's Codes of Conduct, STEP may have regard to them when exercising its disciplinary functions.
- Access and disclosure of an incapacitated person’s will (E&W)
Published jointly by the SRA, Legal Services Ombudsman, The Law Society of England and Wales and STEP, this guidance note clarifies when a solicitor can disclose a copy of a client’s will to a property and financial affairs attorney or deputy appointed by the Court of Protection, in circumstances where the client has lost mental capacity. The guidance provides that, unless the donor has expressly said that the will should not be disclosed, or the solicitor has reason to believe that the attorney has not acted (or is/will not be acting) in the donor’s best interests, the will is the property of the donor, and a copy can be released.
Joint guidance note on access and disclosure of an incapacitated person’s will (Published 2 March 2017 - PDF 104KB)
- England and Wales Practice Rule to Trustee Exemption Clauses
These guidance notes have been produced, following discussions with the Law Commission. They protect the public by formalising what is accepted best practice among STEP members. STEP’s Practice Rule results from close involvement with the Law Commission’s consultation on exemption clauses.
STEP Practice Rule to Trustee Exemption Clauses (PDF 460KB)
- Indirectly owned UK residential property and TRS
Please also find below correspondence between STEP and HMRC seeking clarification regarding indirectly owned UK residential property and the Trust Registration Service. One particular section to note in HMRC’s response is the following (Paragraph 2):
'In light of this we accept the legal arguments you have set out in your letter and require non-UK trusts that incur IHT as a result of schedule A1 not to register on TRS on the basis that no other UK tax is due by the trustees in relation to trust assets or income.'
- UK General Data Protection Regulation (GDPR)
The EU General Data Protection Regulation (EU GDPR) has been in force since 25 May 2018 and the UK General Data Protection Regulation (UK GDPR) has been in force since 1 January 2021. Practitioners, trustees and personal representatives should be aware that they could be subject to one or both of these regimes.
The guidance note linked to below summarises STEP’s understanding of how certain aspects of the UK GDPR should be applied in the context of private, non-charitable, trusts and estates and the briefing notes provide an overview of the legislation and give some general assistance. Given the similarities between the EU GDPR and the UK GDPR, it may also be of use when interpreting the EU GDPR.
The two briefing notes linked to below were prepared when the UK was still part of the EU and so the EU GDPR had direct effect in the UK. Whilst many of the points made in those briefing notes remain relevant under the UK GDPR, members should bear in mind that the law has changed since they were prepared.
Guidance Note: the effect of the GDPR on trusts and estates (Updated March 2021 - PDF 1.25 MB)
Briefing note: EU General Data Protection Regulation (Updated January 2019 - PDF 64KB)
Briefing note:The GDPR – how private client lawyers can justify processing ‘special category data’ (PDF 56KB)
With the United Kingdom’s departure from the European Union (EU) and the end of the transition period on the 31 December 2020, STEP has produced guidance that highlights the specific areas STEP believes will most affect members. It also raises awareness of these issues and links to the relevant guidance documents to assist members.
End of the Brexit transition period: Areas for members to be aware of and prepared for after 1 January 2020 (PDF 729KB) Published January 2021
Briefing Notes and Practitioner Guides
NB: These documents have been produced to assist members in various area or provide clarification on aspects of legislation. They are not intended to be directional in nature, but informative.
- Common Reporting Standard
CRS and Trusts - March 2017: This note intends to provide a current summary of issues of concern in the context of how CRS is intended to apply to trusts, persons connected with trusts and trust assets. It has been prepared by STEP following discussions with the OECD Secretariat and HMRC and sets out STEP’s understanding of the application of the Common Reporting Standard to the circumstances set out below with a view to highlighting points of uncertainty in the reporting framework.
CRS and Trusts (published 8 March 2017)
February 2016: The OECD released a CRS implementation handbook in August 2015, designed to assist government officials in the implementation of the CRS. It provides guidance on the application of CRS generally with some detailed commentary with specific reference to trusts. STEP subsequently met the OECD Secretariat team responsible for the guidance in order to clarify a number of points of information. As a result, we prepared this summary of our dialogue. While this cannot be viewed as official OECD guidance (and we understand there will be future answers to FAQs and updates to the Handbook) we nevertheless thought it would be helpful to members to share these notes.
Common Reporting Standard (published February 2016)
- Digital Assets Practitioner Guides
With digital assets having become important to many areas of our clients’ lives, estate planning now needs to include plans for what happens to our clients’ digital assets on death or incapacity. The Digital Assets Working Group have created a set of practitioner guides to digital assets. The guides have been prepared to assist practitioners with the issue of digital assets when taking instructions from clients for estate planning or estate administration.
- Digital Assets: STEP Guide for Professionals (PDF 888KB)
- STEP Digital Assets Practitioner's Guide - Australia (PDF 106KB)
- STEP Digital Assets Practitioner's Guide - Canada (PDF 107KB)
- STEP Digital Assets Practitioner's Guide - England andWales (PDF 144KB)
- STEP Digital Assets Practitioner's Guide - South Africa (PDF 113KB)
- STEP Digital Assets Practitioner's Guide - USA (PDF 109KB)
Digital Assets Best Practice Guidance - Inventory for Digital Assets and Digital Devices*
*Digital Assets SIG member login required. Join here if you are not currently a SIG member
- EU Succession Regulation, No. 650/2012
Richard Frimston TEP, Partner at Russell Cooke and Chair of STEP's EU Committee has produced FAQs and some examples to help practitioners with the application of the EU Succession Regulation, and to correct some misunderstandings that have arisen.
EU Succession Regulation FAQs (published 1/2016 - PDF 200KB)
- FATCA recalcitrant entity account reporting - February 2017
UK HMRC has confirmed the position for FATCA reporting where a Financial Institution (FI) has been unable to get a self-certification in respect of a new entity account. This only applies to new entity account reporting for FATCA.
Briefing note: FATCA recalcitrant entity account reporting (published February 2017)
- Trusts under a Model 1 Intergovernmental Agreement – general guide
STEP has provided this general guide to assist practitioners in Model 1 jurisdictions that have not yet published their own guidance. Where a local tax authority has produced guidance, this should be consulted in preference. Although the Model 1 IGA is intended to provide a standard template, some jurisdictions have indicated that they are going to implement it in different ways (Canada is, so far, the most notable example of a jurisdiction adopting an approach different to that taken by others). This guide, however, is based upon what we understand to be the consensus approach being taken to FATCA implementation in most Model 1 jurisdictions.
- UK trusts under the UK-US Intergovernmental Agreement
STEP, ICAEW and the Law Society of England and Wales have produced the following guide, flowchart and practical examples on the status of UK trusts under the UK-US IGA.
- Business Property Relief and complex holding company structures (UK)
In correspondence between STEP UK Technical Committee member Emma Chamberlain TEP and HMRC in 2015, the technical division helpfully clarified a few queries in relation to groups and intra group activities such as loans. The correspondence also clarifies the wholly or mainly test in relation to groups. The correspondence is attached below. HMRC confirmed in 2017 that their views remained the same as in the correspondence.
- Clarification on certain aspects of the draft UK legislation on the taxation of non-domiciliaries and offshore trusts
The draft legislation published on 5 December 2016 and 26 January 2017 for consultation relating to the changes to the taxation of non-domiciliaries and offshore trusts is extremely complex and leaves a number of areas of uncertainty, many of which have been highlighted in the formal responses that STEP's UK Technical Committee has submitted to HMRC. These have all been collated in a Briefing Note for members' information.
Briefing note: Taxation of non-domiciliaries and offshore trusts (published 17/02/2017, PDF 59KB)
- Criminal Finances Act 2017 - 'Failure to prevent the criminal facilitation of tax evasion'
The UK Criminal Finances Act 2017 introduced two new criminal offences. The ‘failure to prevent the criminal facilitation of tax evasion’ holds corporations and partnerships liable if they fail to prevent individuals acting on their behalf from criminally facilitating tax evasion. If individuals acting on behalf of an organisation criminally facilitate tax evasion, then the organisation is automatically liable for having failed to prevent this, unless it can make a defence that it had reasonable procedures in place to have prevented this. The offences commenced on 30 September 2017 and relate to both UK tax and overseas taxes. This Briefing Note provides a summary of the new offences.
- Location of Cryptocurrencies – an alternative view
Her Majesty’s Revenue and Customs (HMRC) has recently published its cryptoassets manual which gives the view that exchange tokens (i.e. cryptocurrency) are located where the beneficial owner is resident. For this purpose, HMRC consider an individual to be UK resident if they are tax resident under the statutory residence test. Whilst HMRC have put forward one view, members should be aware that there are alternative views. In particular it is worth noting that HMRC’s view does not appear to be based on any legal principle. To help highlight this area and these alternative views, the following note has been produced by STEP’s Technical Committee and has been shared with HMRC for their reference.
- DAC6: Disclosable arrangements regulations and IEIM – trusts and estates-related points
STEP's comments on the UK implementation of disclosure of cross-border tax planning arrangements under EU Directive 2018/822 (DAC6) and HMRC guidance published in its International Exchange of Information Manual on 1 July 2020 – trusts and estates-related points.
- Finance (No.2) Act 2017: Professional bodies Q&A
Questions and draft suggested answers have been prepared by committee members of ICAEW, STEP, CIOT, and the Law Society of England & Wales to highlight and consider areas of uncertainty in the statutory provisions for:
- Cleansing of mixed funds (v3 with HMRC comments - 13 March 2019)
- Rebasing and the changes to the CGT foreign capital losses election (v2 with HMRC comments - 29 May 2019)
- Trust protections and other trust issues
- The extension of IHT to overseas property representing UK property interests (v2 with HMRC comments - 16 May 2019)
- The extension of IHT to overseas property representing UK property interests (v3 with HMRC comments - 2 March 2020)
as introduced by Finance Act (No 2) Act 2017 with effect from 6 April 2017. The questions and the draft suggested answers have been sent to HMRC for comment.
- Finance Act 2018: Notes on practical points and areas of uncertainty
These notes have been prepared by committee members of STEP, ICAEW, the CIOT and the Law Society to highlight practical issues and uncertainties raised by Finance Act 2018, and Schedule 10 (anti–avoidance, etc.):
- HMRC’s ‘Reliance Statement’
The Institute of Fiscal Studies (IFS) Tax Law Review Committee (TLRC) responded to HMRC’s call for evidence seeking views on how the tax administration framework could be updated and simplified. In its response it highlighted that HMRC’s ‘reliance statement’ has not been substantially updated since 4 March 2009 and that a taxpayer or professional agent cannot always rely on HMRC’s published guidance. STEP has written a letter to HMRC reinforcing this issue and has produced guidance that highlights this risk to members and recommends that they carefully consider the guidance that is being relied upon and whether there could be adverse consequences if that guidance was found to be inaccurate. Members should also be reminded that HMRC’s guidance does not carry the force of law.
- Inheritance Tax – Gift with reservation and spouse exemption
STEP, together with other professional bodies, has been discussing with HMRC the availability of the inheritance tax spouse exemption in relation to assets held in a trust which are treated as beneficially owned by the settlor as a result of the reservation of benefit rules. HMRC have indicated their agreement to the analysis set out in this note and propose to amend the IHT manual (IHTM14303) to reflect this.
Briefing note: Inheritance Tax – Gift with reservation and spouse exemption (published February 2021)
- Instruments of variation
This STEP Briefing Note, written by Paul Saunders on behalf of STEP's UK Practice Committee, looks into issues around instruments of variation, including gifts, beneficiaries' income rights, and variations involving trusts.
Briefing note: Instruments of variation (published November 2012)
- Money Laundering Regulations 2017 overview (UK)
The Money Laundering Regulations 2017 implement the UK’s obligations under the EU Fourth Money Laundering Directive 2015/849 (4AMLD) to introduce a UK trust register. This briefing note, written by STEP Technical Counsel Emily Deane, provides an overview of the new reporting requirements.
- Briefing note: Trusts under the Money Laundering Regulations 2017 (UK) (published 08/2017)
- STEP Model Clause IHT (UK)
Following the entry into force of the UK Finance Act 2012 we set out below a model clause that can be used by persons wishing to leave a legacy qualifying for the reduced rate of inheritance tax to 36 per cent where 10 per cent or more of an estate is left to charity on death. The Finance Act 2012, Schedule 33, inserts a new Schedule 1A into the Inheritance Tax Act 1984 making provision for the new relief. The clause set out below is based on the draft clause submitted to HMRC in the course of the consultation process leading to the finalisation of the legislation.
Model clause (7/10/2013, PDF 510KB)
- Perpetuities and Accumulations Act 2009 (UK)
The UK Perpetuities and Accumulations Act 2009 came into force on 6 April 2010. It simplified the rules against perpetuities and accumulations of income and made drafting wills and trusts easier. Ruth Hughes has written the following Briefing Note explaining the Act.
Briefing note: UK Perpetuities and Accumulations Act 2009 (published May 2010)
- Payment Protection Insurance (PPI)
A member of STEP's UK Practice Committee has raised concern that claims management companies may begin pursuing fiduciaries based on the argument that they and their advisors would have been expected to investigate whether estates were entitled to compensation. A briefing note outlining the potential issue and informing members of the action they may wish to take has been prepared.
Payment Protection Insurance Briefing Note (PDF 172KB)
- Reforms to the taxation of non-domiciles: trust protections (UK)
In the Summer Budget 2015 the UK government announced a series of reforms to the tax rules for people who are not domiciled in the UK. This topic has been explored further via a follow up consultation in 2016. The changes are intended for the 2017 Finance Bill. This paper, drafted by STEP's UK Technical Committee in September 2016, sets out a potential alternative approach to legislating the trust protections.
Reforms to the taxation of non-domiciles: trust protections (PDF 226KB)
As an update to the above, this note has been prepared by committee members of STEP, ICAEW and the CIOT to highlight practical issues and uncertainties in the statutory provisions for trust protections as introduced by the UK Finance (No 2) Act 2017.
Deemed Domicile Changes: Trust Protections – notes on practical points and areas of uncertainty (PDF 248KB) Published December 2020
Committee members of STEP, ICAEW and the CIOT have prepared a consolidated note to highlight a key issue in the statutory provisions for trust protections in relation to offshore income gains. The material has been, for the most part, previously published but is brought together in this consolidated note.
Deemed Domicile Changes: note on the trust protections and offshore income gains (PDF 234KB) Published February 2021
- Requirement to Correct
The UK Finance (No 2) Bill 2017 introduced a new ‘Requirement to Correct’ obligation, which requires taxpayers with any existing non-compliance relating to offshore issues to correct the situation before 30 September 2018. This is a one-year opportunity before those in this position become liable to more severe penalties for non-compliance. It applies to any taxpayer (including individuals, companies, and trusts) and applies to income tax, inheritance tax and capital gains tax.
- Settled Land Act (UK)
The ability to create a new trust under the Settled Land Act 1925 (SLA) ceased on 31 December 1996. However, many SLA trusts continue to exist. Paul Saunders TEP on behalf of the STEP UK Practice Committee has written the following briefing notes to explain what happens to the land when the (last) tenant for life dies (see part one); sale of land by the tenant for life; investment powers of the tenant for life and the SLA trustees; the purchase and/or exchange of land; the rights to a grant on the death of the tenant for life; tenant for life powers of delegation; legal capacity and other miscellaneous points.
Briefing note: Settled Land Act (published November 2015 - PDF 98KB)
- Statutory Residence Test (UK)
STEP UK Technical Committee has drawn up the following briefing note to clarify the rules on temporary non-residence.
Briefing note: HMRC Statutory Residence Test (published 20/11/14, PDF 302KB)
- Trustee residence: revised guidance
STEP, the ICAEW Tax Faculty and CIOT have issued revised guidance on trustee residence to replaces TAXGUIDE 3/10.
Trustee residence tax guidance: TAXGUIDE 06/15 (published 2015, PDF 500KB)
- Trusts (Capital and Income) Act 2013 (UK)
STEP’s UK Practice Committee has drawn up the following guidance note to explain the impact of the Trusts (Capital and Income) Act 2013 on practitioners.
Trusts (Capital and Income) Act 2013 (PDF 470KB)
- Trusts - 50% income tax rate (UK)
With effect from 6 April 2010 the UK Finance Act 2009 increased the trust rate to 50% from 40% and the dividend trust rate from 32.5% to 42.5%. This STEP briefing note looks at the implications for practitioners.
England and Wales
- Execution of wills using video witnessing (E&W)
The UK government is introducing temporary legislation to allow people to use a video link to witness a will being executed, if the physical presence of that witness is not feasible. The legislation is understood to be being introduced by way of Statutory Instrument made pursuant to s.8 of the Electronic Communications Act 2000. This legislation will apply in England and Wales only.
Briefing Note: Execution of wills using video witnessing (E&W) (PDF) - 17 November 2020
- Lasting Powers of Attorney and Deputyship Guidelines (E&W)
Dealing with a person’s property and investing their money – a guide for Attorneys and Deputies in England and Wales.
- Appropriations (England and Wales)
This STEP Briefing Note, written by Paul Saunders and Jo Summers on behalf of STEP’s UK Practice Committee, gives practitioners background information on what appropriations are, how to make one when administering a trust or estate and some of the common challenges they may encounter in doing so.
Briefing note: Appropriations (E&W) (PDF 180KB), 24 October 2019)
- Property holding by trustees in England and Wales
This consolidated series on property holding by trustees in England and Wales was written, on behalf of the STEP UK Practice Committee, by:
- Paul Saunders FCIB TEP, Independent Trust Consultant, STEP UK Practice Committee
- Katherine Rose (MARLA), LSL Corporate Client Department
- Sian Pinheiro-Torres (MARLA), LSL Corporate Client Department
The law is that applicable as at 30 June 2017.
- Removing a trustee who no longer has capacity
Where a trustee lacks capacity, it can be problematic. Often, the solutions can seem complex, but a structured approach will help. Sir Alex Elphinston TEP, member of STEP's Mental Capacity Special Interest Group Steering Committee, provides this guidance, comprising a flowchart of the main procedures that need to be followed.
Removing a trustee who no longer has capacity (PDF 388KB)
- Revocation of an Enduring and Lasting Power of Attorney by a donor
This Briefing Note from Caroline Bielanska, a member of STEP's Mental Capacity Special Interest Group, considers how and when an Enduring or Lasting Power of Attorney can be revoked.
- Safeguarding provisions in lasting powers of attorney (England and Wales)
Lasting Powers of Attorney (LPAs) are easy to make and, particularly in the case of a property and financial affairs LPA, unfortunately easy to abuse. Simply advising a donor to choose an attorney who is trustworthy, is not sufficient. This guidance and enclosed template for advance consent, prepared by Caroline Bielanska TEP, can be used by practitioners for their clients.
Safeguarding provisions in lasting powers of attorney (England and Wales) (PDF 84K) - December 2017
- Our safeguarding vulnerable clients’ policy (England and Wales)
This briefing note was prepared by Caroline Bielanska TEP, who gives permission for its use
STEP Briefing Note: Our safeguarding vulnerable clients’ policy (England and Wales) (PDF 284KB) - December 2019
- When professional deputies should seek authority from CoP (England and Wales)
This briefing note, produced by the Law Society, Solicitors for the Elderly, the Court of Protection Practitioners Association, the Professional Deputies Forum, with the help of STEP and its Mental Capacity Special Interest Group, outlines when professional deputies should seek authority from the England and Wales Court of Protection (CoP) before acting in P’s interest; following the judgment in Re ACC, JGJ and HPP  EWCOP 9.
STEP Briefing Note: professional deputies seeking authority from CoP following Re ACC judgment (PDF 191KB) Published February 2021