A summary of key legal updates for the Private Client sector over the past week is as follows. 

Tax reforms to pay for government Covid borrowing

It is reported that Health Secretary, Sajid Javid, has insisted there should be no new tax rises before the next election: instead, there should be cuts to public spending if more money has to be found in the coming years. This comes after Boris Johnson's comments earlier last week that further tax rises could not be ruled out. Our view is that clients still need to be prepared for possible reforms to capital taxation, particularly in respect of capital gains tax. https://www.solicitorsjournal.com/sjarticle/Taxing%20Times:%20Potential%20tax%20reforms%20to%20cover%20government%20Covid%20borrowing

Dividend tax hike

Commentary is emerging on the dividend tax rate hike announced last week. This includes how the 1.25% increase will primarily hit sole traders, self-employed individuals and directors of very small companies who pay themselves primarily through dividends, rather than wealthy individual investors who may have moved their holdings offshore and/ or are making use of their annual ISA allowance to hold share portfolios. Commentators have also observed that the dividend tax hike will likely boost demand amongst investors for venture capital trusts which offer tax-free dividend payments. Small businesses are collateral damage in social care tax hike | Nils Pratley | The Guardian; Dividend tax hike likely to boost demand for VCTs | Money Marketing

Contentious probate case – Beddoe relief

In Clyne v Conlon & Ors [2021] EWHC 2444 (Ch), a sole executor has obtained a Beddoe order indemnifying her for legal costs of defending a case brought by her cousin who claims that he is already owner of most of the estate's assets under a verbal agreement made with the deceased (his father) 30 years ago. Without a Beddoe order, the executor may be held personally liable if she unsuccessfully defends her cousin's claim and is considered to have acted unreasonably. This Beddoe application was complicated by the fact that, although the cousin is bringing his claim as a third party, he is also a residuary beneficiary of the estate. The granting of the Beddoe order therefore creates a risk of injustice to the cousin as he will potentially be compelled to bear part of the costs of his own claim (by these coming off his share of the estate), even if he succeeds in it. Clyne v Conlon & Ors [2021] EWHC 2444 (Ch) (10 September 2021) (bailii.org)

Remote court hearings

The Scottish Civil Justice Council has issued draft rules (open to consultation until 18 October) proposing that virtual hearings should become the Scottish courts' default approach for most civil litigation. The civil courts in Scotland shifted to an online hearing model in March 2020, due to the pandemic. The Bar Council of England and Wales issued a statement in May 2021 urging caution against the widespread adoption of virtual hearings post-pandemic. We await the findings of the consultation launched by the England and Wales Family Court in June 2021 on remote, hybrid and in-person hearings in the family justice system and the England and Wales Court of Protection. Scotland's courts may permanently shift to virtual hearings in civil cases | STEP