Whethering the weather

During the memorably cold first few weeks of January, the BBC website carried a story comparing the nation’s reaction to adverse weather in 2010 with that of 1963, when the sub-zero temperatures that struck on Boxing Day 1962 lasted until the following March.

Comparing 1963’s relatively small number of school closures with those of today (some 9,000 in England, 950 in Wales, 250 in Scotland and 16 in Northern Ireland) it highlighted how pupils tended to live closer to their schools in the ‘olden days’. More tellingly, though, it quoted Peter Hennessy, professor of contemporary British history at Queen Mary University of London, as saying we have become “a health and safety nation”.

Indeed, we have — certainly when compared with many eras from our past when danger and discomfort were accepted as a normal part of everyday life. The question today for many people, both at home and in the workplace, is how much reduced levels of risk justify the additional burden of legislation and other measures that we live with — from CCTV to bans on firework displays, from packets of peanuts that warn they ‘may contain nuts’ to horizontal ‘topple-tested’ gravestones.

While it’s easy to mock some of the more extreme examples of this culture, there’s no doubt that some aspects of it go right to the heart of some of the greatest challenges facing society. Scanners at airports, for example, that enables operators to see under one’s clothing. Getting the right balance between what many see as a contravention of their right to privacy and others as a potentially vital tool in the fight against crime is a testing moral question that will never satisfy everybody.

However, steps that almost everybody now regard as eminently sensible — from the enforced wearing of safety belts to a ban on driving while intoxicated — also had their detractors when they were first proposed. Within a number of years, it is possible that the knowledge your body is being scanned will seem as natural as ‘clunk, click every trip’.

In the meantime, though, there is little doubt that the cause of many sensible measures would be helped no end if they were not regarded in the same light as some of the more ‘controversial’ decisions made by councils and other organisations in recent years.

But most of us in the end would probably elect to put up with the decline of Bonfire Night celebrations as long as we did not have to share the roads with drunk drivers. Sometimes it’s a balance worth having.

Cheer up — you might be richer than you thought!

A senior economist has announced that many people are actually richer than they think — at least when compared with the population as a whole.

According to Alastair Muriel of the Institute for Fiscal Studies, many people have little understanding of income distribution, and many are much further up the scale than they think they are.

As he said, “The reason is that people tend to look at what they earn against the huge salaries and incomes quoted for bankers, footballers or rock stars, or because they compare themselves to what their boss is earning. They forget that included in the income distribution are the millions of people on benefits and many pensioners who are not well off.”

For this reason, a recent graduate on a first-job salary of around £25,000 might be very surprised to know that they are actually in the top 20 per cent of income distribution. A childless couple each earning £25,000 is in the 87th quartile, meaning that just 13 per cent of the population earns more. And a mere 4 per cent earns more that a childless couple (or one with grown-up children) with a combined income of £80,000.

Holiday plans

It suddenly appears that new Bank Holidays are like buses — you wait for ages for one to come along, and then two arrive at once.

No sooner had we got used to the idea of a special holiday in June 2012 to celebrate the Queen’s diamond jubilee than the Trades Union Congress (TUC) was backing a call for a new ‘Community Day’ to celebrate volunteering and encourage people to take part in community events.

An official campaign has been launched in support of the idea, which is being run by the National Council for Voluntary Organisations (NCVO), Community Service Volunteers (CSV), Volunteering England and the National Association for Voluntary and Community Action (NAVCA).

While no decision has been made at the time of writing, when a similar proposal was made in 2007 for a holiday to mark ‘community heroes’, the Confederation of British Industry (CBI) pointed out that every bank holiday costs the British economy close to £6 billion.

So, particularly as recovery kicks in over the years to come, it might prove difficult for any Government to justify more paid time off, especially so soon after the increase in statutory holiday entitlement from 20 to 28 days. Only time will tell.

Commercial property and the environment

With more than half of the UK’s carbon output coming from buildings, it is clear that that the Government’s ambitious CO2 reduction targets (reducing it by 80% between 1990 and 2050) will have a powerful effect on commercial property.

This will initially be driven by the so-called Carbon Reduction Commitment (CRC), which is set for a phased launch over five years, starting in April 2010. Managed by the Environment Agency to stimulate better energy efficiency among major electricity users in both the private and public sectors, the CRC will from 2011 require such organisations to buy ‘carbon allowances’ costing £12 for each ton of CO2 emissions they are responsible for.

Organisations will initially be allowed to buy as many allowances as they want but a cap will be applied after three years, which will lead to the creation of a market where allowances are traded.

It is expected that penalties for non-compliance among qualifying organisations will be severe. It is also anticipated that an equivalent scheme will be developed for smaller organisations.

If you have concerns about your business’s ability to comply fully with current and forthcoming environmental or commercial property legislation, contact the appropriate expert at our solicitors’ practice.

Are you ready for the fit note?

This April will see a highly significant change to the UK’s sickness absence system, when the long-established sick note is replaced by the so-called ‘fit note’.

This change comes in response to the very high cost of ill-health to the national economy, which is estimated to stand at £100 billion each year. Part of the problem in the past has been the ‘absolute’ nature of whether someone is deemed fit to work or not. This has meant that the sick note prevents people from working at all when, with the appropriate support of their employers, they may be fully capable of a wide range of productive tasks.

Developed after widespread public consultation and with the input of close to 600 GPs, the new fit note form enables doctors to give advice to employers on the straightforward changes to working conditions that may enable a person to return to work more rapidly. These may include reduced working hours, for example, or a modification to the work they are expected to do.

In this way, it is hoped that the cost of long-term absence to employers may be reduced, while helping employees to regain sooner the satisfaction of returning to work.

The possible cost of waiving your salary

During periods of economic uncertainty, such as those that many sectors are continuing to experience today, company directors can often decide to forego the payment of their salary to help ease the burden on the business’s cashflow and other finances.

However, taking this route needs to be done with extreme care. Unless the correct procedures are followed, it is very possible that PAYE and National Insurance may continue to be due on the waived salary.

This is because under PAYE rules a salary can be considered to have been received for PAYE purposes even though it has not actually been paid.

Circumstances where this might happen include the comparatively simple situation in which a director is entitled to a salary payment but does not draw it. There are several other scenarios, most of which are very complex.

This has proven to be a problem for many companies — precisely at a time when making unscheduled and unnecessary payments is a particularly galling reality. Since HM Revenue and Customs are notoriously difficult to placate when faced with irregularities, it is invariably worthwhile to take professional advice when considering a waiver of salary.

Tax relief disappears on UK holiday properties

Many people who let or are planning to let their second homes in the UK as holiday properties are set to lose the right to tax relief from April this year.

Currently, HM Revenue & Customs allows owners to write off ‘trading losses’ from second homes against their tax bills. However, this right is being withdrawn from owners of UK properties, although it is being extended for a further year to those with second properties elsewhere in the EU.

With many people having based their retirement plans on the current tax regime, the outcry against the change was significant, with tax expert Anne Redston, Visiting Professor at King’s College London, referring to “a very vocal, articulate section of society screaming blue murder…”

Even with the change, though, holiday lets can be a lucrative way of using a second property. A home qualifies as a holiday property if it is furnished, run as a commercial venture and available for at least 140 days a year.

If you need advice on the changes or are considering offering holiday lets, talk to one of our experts about the tax implications and the best way to structure the business.

It’s a question of values

Although there is an assumption that the Divorce Court’s determination of a divorcing couple’s assets and liabilities is set in stone, this is not invariably the case.

A number of recent cases have shown that there are circumstances under which the Court will agree to a revaluation, which will usually involve at least one of two fundamental principles. The first of these involves a situation where a wrong value was placed on an asset, resulting in a settlement that would have been different had the right value been applied.

The second involves an unforeseen occurrence that radically alters an asset’s value to the extent that the original intention of the settlement is substantially changed.

Major changes in the value of a company’s shares, however, do not appear to qualify under either scenario, provided that the valuation was correct at the time of the settlement being agreed. This is because it is an accepted reality that the value of shares fluctuate, and that any settlement based on the future value of shares involves an inherent risk.

It is therefore important that divorcing couples gain professional advice in valuing assets, and that the valuer considers best and worst case scenarios in assessing future values.

Protection for cohabitees

Many cohabiting couples who are neither married nor in a civil partnership do not fully appreciate the comparative weakness of their position in the eyes of the law.

Unlike their ‘official’ counterparts, if one partner dies without making a will there is currently no automatic right of inheritance, and following the breakdown of a relationship there is no requirement to provide financial support for one another.

Whether or not these and other issues are resolved appears to depend upon which party wins May’s general election. The Labour Government announced in 2009 that it intends to review the current law. The Law Commission has also proposed that there should be a divorce-style maintenance regime with an automatic right of inheritance (involving half the deceased’s estate) after two years of co-habitation.

The position of the Conservatives is less clear, however. While Shadow Justice Minister Henry Bellingham stated late last year that they would support this move, in early 2010 the party declared its intention to introduce a new tax regime that ‘rewards’ couples for being married.

All that is certain is that cohabiting couples are currently exposed to the impact of major changes in their circumstances. Anybody wishing to ensure that they and their partner are properly protected should first and foremost draw up a will, as well as discussing with a solicitor other ways in which they can ensure that their wishes are respected.