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Gifting Intellectual Property in a Will

Whether Intellectual Property (IP) rights make up a major or minor share of the value of an estate, testators should carefully consider how they are gifted under their Will. It is essential to ensure that IP is properly identified, valued and transferred to beneficiaries on death.

What is Intellectual Property?

IP refers to many different types of legal rights and intangible assets. Some of the most common rights to consider in estate planning are:

• Copyrights – rights to original artistic, dramatic, musical and literary works lasting for 70 years after the death of the author/creator
• Patents – protection for inventions and innovative processes lasting for 20 years from registration
• Trademarks – distinguishing branding features that can be registered for a ten year period and renewed thereafter
• Design rights – protection for the appearance of a product, in whole or in part

These types of IP often generate income during the testator’s lifetime and after their death, typically through royalties and licensing, so should be considered in the process of drafting or updating a Will.

Key considerations when gifting IP in a Will

Identification

Any IP assets should be clearly identified in the Will or accompanying Letter of Wishes with details such as registration information, creation dates and any associated agreements (such as licensing arrangement) noted in the relevant document.

Any ambiguity could lead to disputes or delays in probate being granted and onward transfer to beneficiaries.

Asset management and choice of executor

IP rights often require ongoing management including renewing registrations, negotiating terms of licensing and dealing with any infringement issues. This should be considered when dealing how IP assets are passed down beneficiaries.

Some testators will choose to create a trust structure to administer the ongoing management of these assets. In certain circumstances this can help to preserve the value of the assets over time, but advice should be sought to determine if this is a suitable solution.

It is common to appoint specialist executors or trustees to manage these assets. This is a particularly important consideration when the testator’s IP generates significant income or is involved in complex commercial agreements.

Tax implications

IP assets are subject to Inheritance Tax so accurate valuation on death is fundamental. Valuation of these assets can be complex, particularly where multiple income streams are involved, so professional valuation may be required. It is also likely that there will be income tax considerations for beneficiaries and executors. Tax advice should be sought if necessary.

Conclusion

In summary, where a testator holds IP rights they should carefully consider how they would like to pass these assets to their beneficiaries. Proper identification and valuation of these assets is essential to ensuring that the administration of their estate can progress smoothly and without delay.

Obtaining tax and estate planning advice helps to ensure that these assets are protected and preserved when being passed down to beneficiaries.

To discuss the contents of this article, please contact our Private Wealth & Tax team via the form below.

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Deemed Ownership in SDLT: Lessons from the Angela Rayner Case

A Political Storm Over Property Tax

Deputy Prime Minister Angela Rayner has found herself at the centre of a tax controversy involving the underpayment of Stamp Duty Land Tax (SDLT).

The issue arose after she purchased a flat in Hove in May 2025, paying standard SDLT rates on the £800,000 transaction. However, it later emerged that she had previously transferred her share of the family home, which she purchased in April 2016 with her then-husband Mark, into a trust for their disabled son. Under complex deeming provisions in SDLT legislation, Rayner is treated as still owning that property for SDLT purposes, thereby triggering the 5% surcharge applied to second homes or additional properties.

Though the trust had been established by court order and she had said that she had relied on professional advice from “a conveyancer and two experts in trust law”, Rayner ultimately admitted under-paying stamp duty by £40,000, referred herself to the independent ethics adviser and began discussions with HMRC about settling the shortfall. It is worth adding that the conveyancing firm had since denied that they gave additional SDLT advice and relied on Rayner’s instructions to compute the SDLT due. Now, with confirmation that she breached the ministerial code and her resignation confirmed, her political career appears to be in tatters.

Her case illustrates how technical tax provisions can entrap even high-profile public figures and highlights the importance of understanding deemed ownership rules under Schedule 4ZA of the Finance Act 2003.

Deemed Interests Under Schedule 4ZA of the Finance Act 2003

The additional SDLT surcharge on second homes is governed by Schedule 4ZA of the Finance Act 2003. Under paragraph 8, individuals may be deemed to hold a “major interest” in residential property even when they do not hold legal title personally.

Specifically:

“A person is treated as having a major interest in a dwelling if it is held in trust for a child (under 18) of the person, or of the person’s spouse or civil partner.”

In practical terms, this means that if a parent places a property into a trust for their minor child, even if done by court order, they may still be treated as owning it when calculating SDLT on future purchases. This can inadvertently trigger the 5% surcharge for owning multiple properties.

This provision aims to prevent tax avoidance through indirect ownership structures. However, it also catches entirely legitimate trust arrangements, including those established for the care of vulnerable or disabled minors.

Trusts for Vulnerable People: No SDLT Exemption

There is a common misconception that trusts for disabled beneficiaries enjoy broad tax exemptions. While Capital Gains Tax and Inheritance Tax rules provide favourable treatment for vulnerable beneficiary trusts, SDLT does not follow suit. HMRC’s SDLT Manual makes it clear that:

• A parent is deemed to have an interest in property held in trust for their minor child, regardless of disability.
• This applies whether or not the parent is a trustee.
• Court-ordered trusts do not override the deeming rules.

The Rayner Example

Angela Rayner purchased a property in Hove in May 2025 and paid standard SDLT, having transferred her prior home into a trust for her disabled son. However, under paragraph 8, she was deemed to still have an interest in that first property, meaning the higher SDLT rate should have applied.

Although Rayner notes she had relied upon professional advice from “a conveyancer and two experts in trust law”, HMRC’s position is clear: deemed ownership applies regardless of intent or legal title, and ignorance of the rule is no defence.

The Risk of Inadvertent Non-Compliance

Rayner’s case is not unique. Many individuals overlook these deeming provisions, particularly when trusts are set up for personal or protective reasons rather than for tax planning.

Key risks include:

• Unwitting underpayment of SDLT when purchasing a new property.
• Exposure to interest and penalties from HMRC (up to 30% in careless cases).
• Reputational damage, particularly for individuals in public office or regulated professions.

Even more critically, individuals acting as trustees, whether appointed by court or voluntarily, have a legal duty to be aware of the nature and effect of the trust agreement. Trustees are expected to understand their legal obligations, the structure of the trust, and the property held within it. This fiduciary responsibility extends beyond the administration of the trust itself and includes awareness of any tax implications that may arise when the trustee acts in a personal capacity, such as when purchasing property. Where a trustee fails to disclose a trust interest that could affect SDLT treatment, they may be deemed negligent, even if acting in good faith.

This highlights a broader issue which is that conveyancers can only act on what they are told. A buyer who omits material information, such as a role in a trust that holds residential property, risks incorrect SDLT treatment and exposure to penalties, regardless of their interest.

Conclusion

The Angela Rayner case has brought public attention to a corner of tax law that can have substantial consequences. The SDLT deeming rules are not concerned with fairness or intent; they apply automatically and without exemption. Legal and tax professionals advising on family trusts, particularly involving minors or disabled beneficiaries, must have a working knowledge of these provisions, and importantly, trustees, especially as the buyer of a residential property, must be aware of the need to disclose any interest (direct or deemed) in other properties, including trust-held ones to their conveyancers.

As the Rayner case shows, the cost of oversight is not just financial, but reputational.

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The Winter Budget is Coming: Speculation, speculation and more speculation

With the Autumn (although arguably Winter) Budget confirmed for 26 November 2025 and with the Chancellor Rachel Reeves under ever-growing pressure to address a significant fiscal gap (estimated at around £20–£40 billion), speculation is growing unabatedly and somewhat exhaustingly! While Labour maintains its manifesto pledge not to raise income tax, VAT, or National Insurance on working people the Government appears (through ongoing media speculation) to have inheritance and property in its crosshairs to plug the shortfall. 

Potential changes on the horizon

So, given the constant fiscal newsfeed and the potential urgency, we have waded through the media speculation to present the key potential changes to look out for in the private client space:

Inheritance Tax (IHT)

In this Budget, we may see an announcement of a lifetime cap on tax free gifts, limiting the total amount that can be passed on exempt from IHT, even if the donor survives seven years. Possibly, instead of or in addition to this, we may see an extension of the so-called ‘seven-year rule’ to ten years, which would align conveniently with the latest IHT changes introduced on 6 April for Long-Term Residents.

Stamp Duty Land Tax (SDLT) Overhaul and Mansion Tax

Reports in various media outlets suggest a radical overhaul of SDLT, including:

• Replacing upfront SDLT with a proportional ‘national property tax’ on homes over £500,000; and
• Introducing a ‘mansion tax’ or wealth-based levy on high-value properties (possibly above £1.5 million or even £2 million).

How this applies to non-residents and owners of additional properties remains to be seen, but we would expect some form of surcharge to remain to dissuade overseas buyers from accumulating too much UK property.

Capital Gains Tax (CGT) on Primary Residences

This may shock many but the exemption on gains from selling primary residences could be removed for high-value properties, with speculation that this would apply to properties valued over £1.5 million with CGT kicking in at the excess of this.

National Insurance on Rental Income

The Government is considering subjecting private landlords’ rental income to NIC (potentially an 8% lev) affecting individual and partnership income.

What can be done?

Without wanting to dive into complex prose not turn this into an opinion piece, I will keep this punchy in the interests of time.

The key takeaways are as follows:

• Review assets in the next two months and establish (with the assistance of both lawyers and financial advisors) what assets can be gifted; and
• Consider any upcoming property transactions and establish whether to accelerate or delay pending the outcome of the Winter Budget and further clarity on SDLT reforms.

If you have any queries relating to Inheritance Tax and gifting, please contact Ben Rosen of Quastels LLP.

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