I’ve been offered an exciting new role in the City but I’m unsure about the best timing for my resignation. What factors should I consider?
Nicola Welchman, partner at Bloomsbury Square Employment Law, says there is always plenty to consider when timing a resignation but particularly when you work in the City, where contracts can be complex and even onerous. First, wait until you have a firm offer and have seen the contractual terms. Your new employer may have made an offer orally but, regrettably, job offers don’t always turn into concrete jobs. There’s always a risk that vetting processes will take longer than anticipated or even that a job offer is withdrawn.
A key consideration when planning your resignation may be the payment of any bonuses owed to you. To incentivise loyalty, payment is usually conditional on your being an active employee — not under notice — on the date of payment. Unsurprisingly, employers rarely pay bonuses to outgoing staff. Similarly, any long-term incentives — stock options or shares — are paid out only on scheduled dates, up to three years hence. Most will lapse on resignation. To avoid missing out, carefully time your resignation or consider negotiating a sign-on bonus with your new employer.
Think carefully about whether you genuinely want to resign. Sometimes, letting your boss know that you have been offered a compelling prospect elsewhere is a golden opportunity to explore a promotion or pay rise.
If you go ahead and resign, you will need to take account of any notice period you are required to give even though your new boss may want you to start straight away. Your existing employer is likely to hold you to your notice if you move to a competitor and may well place you on gardening leave. Notice periods are often negotiable, however, and some employers may be open to making a payment in lieu of notice — paying you some or all of what you would have been paid during the notice period, but not requiring you to work it. So bear this in mind.
Your contract of employment is very likely to have post-termination restrictions which will prevent you from undertaking a particular activity for a period of anything between three and 12 months. The restrictions may prevent you from working for a competitor, soliciting or dealing with clients and often with former colleagues. There is a common misconception that these restrictions are not enforceable. This is not the case. Don’t underestimate their significance.
Finally, while it’s impossible to know what’s around the next corner, if you are planning to have a baby, you may wish to take this into account when considering the new role. Most employers will have a minimum service requirement to access enhanced parental benefits. Even statutory payments require you to be working with the same employer for a minimum period before being eligible.
Similarly, if you or a family member are about to access private medical treatment, the insurance policy with your current company will usually lapse on termination. The pre-existing condition may not be covered by the new policy.
Should I donate my rare plant collection?
After visiting the Chelsea Flower Show, I have been thinking about my plant collection and what to do with it once I’m no longer able to care for it. I have a rare collection of orchids and friends have suggested I may be able to donate them to a botanical garden and reduce the inheritance tax due on my estate. Is that possible?
Will Leonard, director at Saffery law firm, says items, or collections of items, may be offered in lieu of inheritance tax if they are considered to be pre-eminent for their national, scientific, historic or artistic interest. The bar for “pre-eminent” status is high, but it is possible that a sufficiently rare collection of orchids would be considered pre-eminent for scientific purposes and would therefore qualify for the Acceptance In Lieu scheme. A collection as a whole might be considered pre-eminent, even if the individual items within it would not be by themselves.
Natural England or Scottish Natural Heritage provide HM Revenue & Customs with an independent assessment of whether land meets the pre-eminent test. I would assume they, or a similar body, would be asked to advise with respect to plants.
If the “pre-eminent” test requirements are satisfied, the “special price” is calculated based on market value, less the tax that would be due, but adding back a “douceur”, which is 25 per cent of the tax. The resulting value can be offset against inheritance tax owed on the remaining estate. If the special price is more than the inheritance tax due, HMRC will not pay a refund. For example, for an orchid worth £100 on which inheritance tax would otherwise be payable at 40 per cent, the special price will be £100, less £40 inheritance tax, plus a douceur of £10 (being 25 per cent of the £40 inheritance tax), to give a special price of £70.
An orchid collection would be treated as chattels unless they were growing on land which was also being donated.
If someone is thinking of making an offer in lieu, it is usually wise to start discussions with interested institutions early on, as they can help support any application.
Our next question
I am currently preparing my will, following my retirement. I recently took the decision to invest a portion of my wealth in cryptocurrency and I plan to invest more in the coming months. I am thinking about any potential pitfalls I might need to navigate with crypto versus more traditional assets like real estate or cash. What are the tax considerations? What about the security of my wallets, for example handing down the different passwords in a secure manner? I would also like to make sure that investing in a number of different coins and passing them all on separately is the most sensible approach.
It is also possible to claim something called “conditional exemption” on heritage property. That defers the inheritance tax charge on qualifying property, assuming the owner permits reasonable public access, typically at least one month a year. This can be quite onerous, unless the collection is lent to a suitable museum, or in this case botanical garden, with the agreement that the botanical garden will ensure the public have access to the collection for at least the minimum period.
If the orchids are being grown commercially as part of a trade, they may qualify for Agricultural or Business Property Relief. Following the changes proposed in the October 2024 Budget, APR and BPR at 100 per cent have been capped at a maximum value of £1mn, with relief at 50 per cent on values in excess of that. A commercial plant-growing business worth £1.5mn would therefore have a taxable value of £250,000 after APR and BPR have been deducted. The first £1mn would get 100 per cent relief and the remaining £500,000 would receive 50 per cent relief.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
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