In this month’s episode of US-UK Tax Talk, Aidan Grant goes north of the border with Susanne Batchelor, Partner and Head of the Personal team at Brodies, to explore how Scottish law and tax differ from English law, and why that matters for US-UK planning.

In this episode of US-UK Tax Talk, Aidan Grant goes north of the border with Susanne Batchelor, Partner and Head of the Personal team at Brodies, to explore how Scottish law and tax differ from English law, and why that matters for US-UK planning.

Aidan and Susanne start with the basics: the difference between the UK, Great Britain and England, and why Scotland, with its own legal system, courts and regulators, should be treated as a separate jurisdiction. They then look at Scottish succession law, including “legal rights”, Scotland’s forced heirship rules. These give spouses, civil partners and children an entitlement to part of the movable estate, even where there is a will.

The conversation also covers the rights of unmarried cohabitants, how jointly owned property passes on death, and the key differences in Scottish trust law, including majority decision-making by trustees and the absence of perpetuity periods. Susanne explains Scotland’s separate system for powers of attorney, and the confirmation process, Scotland’s equivalent of probate, which requires a full inventory of the estate that becomes a public document.

Finally, they discuss Scotland’s diverging tax landscape, including higher income tax rates, Land and Buildings Transaction Tax and the Additional Dwelling Supplement, and when Scottish advice is needed.

Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our team for further insights.

Key Takeaways

Is Scotland a separate legal jurisdiction?

Yes. The UK has three legal jurisdictions: England and Wales, Scotland, and Northern Ireland. Scotland kept its own legal system after the union with England, so succession, trust and family law are all different. Some taxes, such as inheritance tax and capital gains tax, are the same across the UK.

What are “legal rights” in Scotland?

Legal rights are Scotland’s forced heirship rules. If someone is domiciled in Scotland for succession purposes, their spouse or civil partner and their children are entitled to a share of the movable estate, such as cash and shares, whatever the will says. Where there is both a surviving spouse and children, each group may be entitled to one third of the movable estate. Where there is only a spouse or only children, the entitlement is one half.

Do legal rights apply to land and buildings?

No. Legal rights apply only to movable estate. Heritable property, such as land and buildings, is not included.

Can legal rights be avoided?

It can be difficult, but there are options. Assets gifted during your lifetime, including into a substantive trust, generally fall outside the legal rights pool. A will can also set out what happens if someone claims their legal rights. A beneficiary must choose between their legal rights and what they are left under the will; they cannot take both.

How long does someone have to claim legal rights?

Up to 20 years. Executors have a duty to tell those entitled about their legal rights. In many family situations, children will choose to give up their legal rights on the first death.

Do unmarried partners have rights in Scotland?

Partly. If there is no will, a cohabiting partner can apply to the court for a share of the estate. The application currently has to be made within six months, although there are plans to extend this to 12 months. The outcome is uncertain, which is why cohabiting couples in particular should make wills.

How does Scottish trust law differ from English law?

Scottish trustees can act by majority rather than needing everyone to agree. There are no perpetuity periods, so a Scottish trust can in theory last indefinitely. There is also no statutory power to advance capital, so the trust deed must include one if it is wanted.

Do I need a separate Scottish power of attorney?

Possibly. A power of attorney from elsewhere in the UK should be accepted in Scotland, but in practice it is not always. Anyone not domiciled in the UK who has assets in Scotland should consider a separate Scottish power of attorney, just as they would a separate Scottish will.

What is confirmation?

Confirmation is Scotland’s equivalent of probate. Unlike in England, executors must list all the assets in the estate, and the inventory becomes a public document.

How do Scottish property taxes differ?

Scotland has its own Land and Buildings Transaction Tax. Its top rate of 12% applies from £750,000, compared with £1.5 million for Stamp Duty Land Tax in England. On top of that, the Additional Dwelling Supplement adds 8% of the full purchase price for those buying an additional home. This can significantly affect Americans buying property in Scotland, for example for children studying at university there.

When should someone get Scottish advice?

Whenever someone is, or may become, domiciled in Scotland for succession purposes, or has assets or interests in Scotland. Relying on an English or US will alone can leave legal rights and other Scottish succession issues unaddressed.