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Private Client Legal Updates - 5 April 2023

A summary of key legal updates for the Private Client industry over the past two weeks is as follows.

Tax policy – new tax year

The new tax rates and allowances coming into effect from 6 April 2023 that affect private clients include the following.

  • Capital gains tax ("CGT") – annual exemption reduces from £12,300 to £6,000 for individuals, and from £6,150 to £3,000 for trustees.
  • Income tax – the additional rate (45%) threshold reduces from £150,000 to £125,140; the dividend allowance reduces from £2,000 to £1,000; and the personal allowance remains frozen at its current level (£12.570).
  • Inheritance tax ("IHT") – the nil-rate band and residence nil-rate band remain frozen at current levels (£325,000 and £175,000 respectively).
  • Corporation tax – with effect from 1 April 2023, the main rate increases from 19% to 25%; the 19% remains as a small profits rate for companies with profits up to £50,000.

Tax policy – Finance (No. 2) Bill 2023 

On 23 March, the UK government published Finance (No. 2) Bill 2023, giving effect to measures announced in the 2023 Spring Budget and the 2022 Autumn Statement, most of which will come into effect for the 2023/24 tax year. It is expected that the Bill will receive Royal Assent in the summer of 2023. The provisions of the Bill that affect private clients include the following.

  • Income tax rates for tax year 2023/ 24 (clauses 1, 2, 3 and 4).
  • Pensions lifetime allowance charge abolished and pensions annual allowance increased (Clauses 18, 19, 20, 21, 22 and 23).
  • Separated spouses and civil partners - extension of CGT "no gain no loss" window on divorce and separation (clause 41). Please see this Crowe note for further information on this CGT/ divorce change.
  • Trusts and estates – formalisation of an existing interim concession that removes trustees and personal representatives from income tax where the only source of income is savings interest and the tax liability is less than £100. The measure will ensure that, with effect from 6 April 2024, trusts and estates with income of any kind up to £500 do not pay tax on that income as it arises. Where the settlor has made other trusts, the amount is the higher of £100 or £500 divided by the total number of existing trusts. Beneficiaries of UK estates will not pay tax on income distributed to them that is within the personal representatives' £500 limit. (Clause 29, Schedule 2)
  • Share exchanges involving non-UK incorporated close companies (clause 36).
  • Carried interest: election to pay tax as scheme profits arise (clause 42).
  • Definition of "charity" restricted to UK charities and definition of "community amateur sports club" restricted to UK clubs (Clauses 343 and 344)
  • Pension benefits and inheritance tax – expansion of the dormant assets scheme (Clause 347).
  • Museums and galleries exhibition tax relief: extension of sunset date (clauses 13 and 14).
  • International arrangements for exchanging information - including the consolidation of automatic exchange of information powers and technical amendment to power implementing OECD's MDR (clause 348).

Spring Finance Bill 2023 published - GOV.UK (; Finance (No 2) Bill 2023 as published: private client tax measures | Practical Law (

Estate administration - Law Society guidance on applying for grants of probate

The Law Society has published an online guide giving latest guidance on probate fees, online probate applications, current waiting times, and how to avoid delays with applications. The guide includes information on current HMCTS staffing levels and how recent recruitment should result in improvements to waiting times "from March 2023 onwards".

Offshore – MDR now in force in UK

The UK's legislation implementing the OECD's “Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures” ("MDR") came into force on 28 March 2023 (International Tax Enforcement (Disclosable Arrangements) Regulations 2023/38 ("the UK MDR")). The UK MDR requires intermediaries to disclose certain arrangements that either: (i) circumvent the OECD Common Reporting Standard ("CRS"); or (ii) create an opaque offshore structure where the true beneficial owners are not identifiable. The definitions of these two types of arrangement share common ground with the arrangements under Hallmark D of the EU's Sixth Directive on Administrative Co-operation ("DAC6" - as implemented by the UK via the International Tax Enforcement (Disclosable Arrangements) Regulations 2020). The UK DAC6 legislation was repealed and replaced by the UK MDR on 28 March 2023. As with the DAC6 regime, lawyers do not need to disclose an arrangement if legal professional privilege applies; the obligation instead falls upon the tax-payer. The International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (

Contentious trusts - trustees do not need to pay claimant's costs despite losing challenge to disclosure order

The Court of Appeal has ruled in Gorbachev v Guriev, 2023 EWCA Civ 327 that the trustees of two Cyprus trusts do not have to pay the legal costs of a litigant (Mr Gorbachev) who applied for a third-party disclosure order against them in the High Court despite the fact that the trustees lost their challenge to the order on grounds of jurisdiction. The original costs order required the trustees to pay the costs of the failed jurisdiction challenge in respect of Mr Gorbachev's disclosure application. The Judge applied the general rule in CPR 44.2(2)(a) that an unsuccessful party will be ordered to pay the costs of a successful party. The trustees argued that the Judge should have applied the general principle for third party disclosure applications, reflected in CPR 46.1, which is that a third party (the trustees) resisting a third party disclosure application (by Mr Gorbachev in this case) will be entitled to their costs, even if they challenge the application and the application is unsuccessful, unless the third party (the trustees) have behaved unreasonably. The trustees argued that it was reasonable for them to advance the jurisdiction challenge and resist disclosure in circumstances where there was doubt as to whether the Court had jurisdiction to order disclosure. The Court of Appeal ruled that there was no basis for CPR 46.1(2) to be displaced in this case: it was reasonable for the trustees to take and argue the jurisdiction point albeit that they were ultimately unsuccessful. The Court allowed the trustees' appeal on costs and substituted an order that Mr Gorbachev should pay the trustees' costs of the jurisdiction application. Gorbachev v Guriev & Ors [2023] EWCA Civ 327 (28 March 2023) (


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