Law Society issues comments on Finance Bill impact on the legal profession

The Law Society of England and Wales issued a reminder to the legal profession on 16 May about the changes being brought in by the Finance Bill, which is currently progressing through Parliament. The Law Society highlights the new measures that are set to restrict charitable tax reliefs to UK charities only, with donations located in the European Union (EU) and the European Economic Arena (EEA) no longer qualifying for UK charitable tax reliefs from April 2024.

President of the Law Society, Lubna Shuja, highlighted the impact these changes will have on private client solicitors: “Members of the profession need to be aware of how the Finance Bill could affect them. Firms will have to consider whether they have wills which need to be revised and to be aware that there is now a reduced pool of organisations which will qualify as a charity.”

The Law Society has also requested that the government extend the full expensing policy, contained in the Finance Bill, to the legal sector. Full expensing allows businesses that pay corporation tax to claim back the tax they pay on qualifying plant and machinery investment. The scheme is due to run from April 2023 to March 2026. Shuja explained that: “Extending full expensing to cover law firms would unlock further investment in one of the UK’s most productive sectors. Legal services add £60bn to the UK economy annually and employ 1.1% of the UK labour force.”

In light of the changes being introduced by the Finance Bill, the Law Society is encouraging firms and solicitors to: consider whether they have Wills which need to be revised and be aware that there is a reduced pool of organisations which will qualify as a charity; think about past clients and existing clients and how the changes will impact those arrangements; and ensure firms are aware that changes have been implemented (subject to some transitional provisions). More specifically, the Law Society highlights that the changes will have an impact across the whole of taxation and that there is likely to be a lack of awareness of the changes among solicitors whose practice does not primarily focus on tax.