Tag Archives: IHT

ILN Today Post

Trusts v FICs: which is best?

Is a company or a trust the best vehicle to hold family money?

Companies can be used to hold family wealth. Often referred to as Family Investment Companies (FICs), at their simplest they can be seeded with funds by subscribing for shares or, if continued access to family wealth is needed, by way of loan (with any growth in the invested loan funds being the FIC’s assets).

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Has HMRC called time on Inheritance Tax planning?

Clients intending to carry out Inheritance Tax (IHT) planning in relation to their assets should consider completing their planning ahead of the 1 April 2018 changes to the DOTAS Regulations, as they apply to IHT.

The Disclosure of Tax Avoidance Schemes (DOTAS) regime is not new but, to date, its application to IHT has been relatively limited.  Not any more.  When it applies, the DOTAS regime requires advisers to notify HMRC of their client’s IHT planning and to provide their client with the number HMRC gives them for that planning.  Of course, this gives HMRC notice of the planning and an opportunity to investigate it, so not surprisingly some clients will be put off carrying out IHT planning if a DOTAS notification needs to be made to HMRC about it.

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How to save tax like a duke

Using family trusts to save IHT is not just for the super-rich, but it does help to have had some well-advised ancestors…

No doubt you’ve read the press reports about the sixth Duke of Westminster who has arranged his financial affairs so that the bulk of his £9bn property portfolio passes to his son, Hugh, without having to pay much in the way of death duties.

So have you ever wondered how the very wealthy seem to pay little or no Inheritance Tax (IHT)?

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The best Christmas present for your family: a discretionary trust?

This article is taken from Helena Luckhurst’s blog The Wealth Lawyer UK.

It’s beginning to look a lot like Christmas out there, as Bing says. Thoughts turn to what gifts to give our family. When it comes to making big gifts to family members, though, in lifetime or on death, still not enough people think of using a trust.

Many people hardly know what a trust is; still less understand what a trust can do for their family. Discretionary trusts (or, to be precise, their trustees) can be taxed without reference to the personal tax positions of the beneficiaries and, if desired, that of the person(s) funding the trust. The fact that trusts are taxable in their own right can be very useful for family tax planning.

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IHT Residence Nil Rate Band: depending on downsizing?

HMRC have published new guidance covering the downsizing provisions of the Residence Nil Rate Band (RNRB) (click here for a link to it).  This will be of interest to advisers looking for a relatively straightforward introduction to this aspect of the RNRB which may be suitable for forwarding on to clients.
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Inheritance Tax planning for business owners is often overlooked

 

When it comes to selling up or transferring on a business to the next generation, entrepreneurs and family business owners are usually encouraged to take measures to reduce the level of Capital Gains Tax payable on the disposal of the business.  Far fewer entrepreneurs are advised to consider their Inheritance Tax (IHT) planning, though, and yet failure to consider the IHT aspects of a sale can cost families dearly in the long term, when 40% IHT is levied on the proceeds of the business sale in due course.Many think of IHT as a tax which only afflicts family wealth if the business owner is still holding the proceeds of the business sale on their death.  However, IHT is a complex tax, affecting lifetime gifts as well as assets held on death.  Successful IHT planning is not just about being caught with the proceeds ‘when the music stops’ (i.e. on death!).  It is not the tax equivalent of a game of musical chairs!
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What happens if you are from the UK or own assets in the UK?

Beware of the dreaded inheritance tax and changes to it from April 2017!

Approximately 1.3 million Britons now live in Australia and Brexit may only increase this number! Many think that moving to Australia means they no longer need to worry about UK tax, but often they are not fully aware of the tax and in particular the inheritance tax (IHT), implications of moving here.  Similar issues can arise for Australians owning UK assets, which has become more attractive because of the exchange rate and individuals working abroad. With information sharing between tax authorities now the norm, it is no longer possible to ignore this.

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A simple way for non-dom married couples to manage the Inheritance Tax on UK residential property from 6 April 2017

Offshore companies holding UK residential property will no longer be opaque for UK Inheritance Tax (IHT) purposes from 6 April 2017.  The change is being achieved, courtesy of the Finance Bill 2017 as currently drafted, by removing IHT ‘excluded property’ status from an interest in a closely held company (see the 15 December 2016 blog for a brief definition) which derives its value, directly or indirectly, from UK residential property. In plain English, that means that anyone owning a right or interest in such a company will have an asset that will be taxable to 40% IHT if the person owns that interest on death.  The same situation applies if instead the person is a partner in a partnership invested in UK residential property.

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Long term UK resident non-doms to be deemed UK domiciled

The UK Government has released draft legislation giving effect to its proposal to deem the domicile status of certain UK resident non-doms to be UK domiciled, regardless of their actual domicile.

The changes only apply to non-doms who, on or after 6 April 2017, have been tax resident in the UK for 15 out of the previous 20 tax years.   For example, in tax year 2017/2018 beginning on 6 April 2017, the changes would only affect any individual who has been resident in the UK continuously since UK tax year 2002/2003 or earlier.  These non-doms will be deemed to be UK domiciled.

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UK residential properties held through offshore structures: a call to action

Owners of UK residential property held through offshore structures, including non-UK companies and partnerships, should urgently review their structures following the publication of a further consultation by the UK Government on 19 August 2016.  The consultation confirms that residential properties in these structures will be exposed to UK Inheritance Tax (IHT) from 6 April 2017.  The aim of the changes is to bring all UK residential properties within the charge to IHT.


For more detail on the proposal, read my briefing note available on Fladgate’s website via this link: https://www.fladgate.com/rFlVC

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