Calculating Notice Periods in a Leap Year

Employers and employees alike tie themselves up in knots over calculating notice periods. Both are normally entitled to a minimal period of notice on termination of employment; for an employer, the notice period is either that set out in the employee’s written contract of employment or employment or as provided for by the Employment Rights Act 1996 (no notice for up to 1 month continuous service, 1 week for up to 2 years continuous service thereafter one week for every complete year of continuous service up to a maximum of 12 weeks), whichever is the longer. For employees, they must give either that set out in their written contract or, if one doesn’t exist, 1 week’s notice.

Notice starts to run the day after the employee is given or gives notice of termination and as expressed in the contract of employment or the 1996 Act, for example whether in terms of days, weeks or months. So, the notice period of an employee with a one week notice period, who resigns on Tuesday 1 March, will expire on Tuesday 8 March (which will be the last day of work).

Where the notice period is expressed in months it will expire on the corresponding date in the relevant month. For example, 2 months’ notice of termination given on 12 January will expire on 12 March.

If there is no corresponding date in the relevant month the notice period will expire on the last day of the month in which the notice expires. This means that notice of termination of employment given on 29, 30 or 31 January 2016 will expire on 29 February 2016.

 

A Leap Year Proposal of a Different Kind: Share Transfer or Asset Transfer?

 

Transfers relating to companies can be divided into two distinct types:  share transfers and asset transfers.  Both have advantages and disadvantages, depending on the position of the buyer or the seller.  Share transfers tend to be more attractive for a seller as selling the shares of a company means getting rid of the liabilities of that company, as well as the assets.  There are, however, a number of practical considerations and steps that must be undertaken when buying or selling the shares in a limited company.  A key factor that must be considered and determined is whether there are any restrictions on the transfer of the shares in question, and these may be found in a number of places, including the articles of the Company, or any agreements that the shareholders of the company may have entered into with each other.  Next, usually a formal agreement between the buyer and the seller will be required by one or both, but at the very least, the appropriate transfer forms must be executed to effect the transfer and finally (after the tax due relating to the transfer has been paid!) the Company itself must approve the transfer and update its statutory books, in particular its register of members.

The other type of transfer common in the corporate context is an asset transfer and this involves transferring each of, or some of, the individual assets of the Company in question.  This in turn means that a variety of consents and approvals will be needed in connection with all the various assets that are being sold and/or searches carried out against the properties in question, before the mechanical aspects of the various asset transfers can be undertaken.

These transfer methods described above are very different and the choice of which route will be taken is often determined in individual cases by a mixture of commercial and taxation considerations.

Thinking of Purchasing Property? Leap Ahead to 1 April 2016

The 1st April 2016 is an important date to take note of if you are about to purchase a property in Scotland and you already have property to your name. The Scottish tax on property transactions -Land Buildings and Transaction Tax (“LBTT”) was introduced in April last year. The tax, originally seen to encourage first time buyers, and attract commercial buyers now has a sting in its tail: a 3% supplement charge will be added to chargeable second property transactions over £40,000. If you are looking to buy another property, you may want to consider selling the other one first to avoid this extra tax.

The Highlights:

  • The supplement affects not only residential purchases, but also commercial and buy to let purchases
  • The 3% supplement applies to second properties purchased for over £40,000
  • The supplement applies to the whole price, not just the amount over £40,000
  • The tax only applies to property purchased in Scotland, but, your other property doesn’t have to be in Scotland, if you already have a property in or outwith the UK, this will be taken into account
  • The supplement won’t apply if you already concluded missives before 18 December 2015
  • If you purchase a new main residence before you are able to sell your existing main residence, then you will be entitled to a refund of the 3% supplement, so long as the sale takes place within 18 months of the purchase
  • The Government will apply a two-stage test to determine whether the purchase does in fact involve a replacement of a main residence.
  • Even if you are intending to rent the second property, the 3% supplement will still apply
  • Individuals with more than one residence will not be able to choose which is their main residence, the Government will apply a facts based assessment in order to determine this

The property market in Scotland is finally picking up the pace, and there are fears that the buy to let market will be deflated by this supplemental tax.