UK Law and Practice Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
2. Succession 2.1 Cultural Considerations in Succession Planning The cultural diversity of the UK means that succes - sion planning motivations and expectations can be nuanced and varied. A common theme is a desire to preserve wealth for the next generation, motivating individuals to consider parting with assets sooner rather than later in the hope of reducing IHT exposure. Conversely, tax complexity and some reluctance to discuss financial matters within families can result in inaction, leading to missed opportunities to reduce tax exposure and a greater risk of future family conflict. The high cost of housing has led to the prevalence of children buying property with financial help from par - ents (the so-called “Bank of Mum and Dad”). Increas - ing awareness of the attendant threat of third-party claims on gifts made in this context has caused an uptick in the use of trusts and other asset protection tools, such as pre- and postnuptial agreements and cohabitation agreements. 2.2 International Planning Globally, mobile families and businesses are exposed to a web of complex and ever-changing tax and regu - latory rules. This requires multi-jurisdictional advice to align tax and legal strategies across borders, taking into con - sideration: • domestic and foreign tax and inheritance laws, as well as conflict-of-laws rules; • increasing anti-avoidance measures; • relevant international treaties; and • monitoring of residence-based tax triggers. A bespoke approach to testamentary provision is required depending on the jurisdiction and the nature and location of assets involved. From a UK perspec - tive, the EU Succession Regulation remains relevant for those owning property in the EU member states where the regulation applies (see 2.3 Forced Heirship
From 6 April 2027 – private pension savings to be brought within the scope of IHT Pension savings previously exempt from IHT will be included when calculating IHT on death. Many pension holders who had previously been preserving their pension wealth to pass it on to the next generation are instead looking to draw down and spend or give it away (where possible using the normal-expenditure-out-of-income exemption) in the hope of reducing the value of their estates for IHT purposes. Draft legislation is pending in relation to changes not yet in force, and the political climate is such that fur - ther changes may emerge. 1.6 Transparency and Increased Global Reporting The UK participates in the US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS), requiring UK financial insti - tutions to provide information about foreign account holders to HMRC (in respect of US account holders in the case of FATCA, for sharing with the IRS). A finan - cial institution can, in this context, include fiduciaries such as a corporate trustee. The UK has implemented Mandatory Disclosure Rules (MDR) requiring intermediaries or taxpayers to dis - close arrangements and offshore structures that tend to obscure beneficial ownership, and is due to imple - ment a crypto-asset reporting framework (CARF) from 1 January 2026. Companies are required to disclose Persons with Sig - nificant Control (PSCs) on the PSC register. Subject to certain limited exemptions, UK express trusts and certain non-UK trusts must register with the Trust Registration Service (TRS) even if not liable for UK tax. These initiatives and the ATED regime have affected tax planning involving offshore structures. There will likely continue to be a move towards more transparent wealth-holding structures, such as FICs.
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