Wed 18 Mar 2015
Despite all the media hype around Inheritance tax and thresholds, there were no NEW announcements regarding Inheritance tax or were there?
There was a cryptic comment in the Budget speech regarding restricting the use of deeds of variation as if these form part of tax planning which can be considered tax avoidance. Deeds of variation can be used within two years of an individual’s death to redirect the assets to different benficiaries.
The only comment in all of the Budget documentation was “the government will review the use of deeds of variation for tax purposes”.
Watch this space
The announcement that tax returns will become a thing of the past has been broadly welcomed by those who need to complete one and with a certain sense of disbelief by those who deal with HM Revenue and Customs and their online systems on a daily basis. The Government’s vision is to create a digital […]
From 5 April 2017 there will be a new £175,000 allowance on homes left to children and grandchildren. At the same time the Chancellor confirmed that the current nil rate band of £325,000 will be fixed until 2020/21. Both allowances can be transferred to a spouse or civil partner with the result that £1 million […]
Here we summarise some of the less prominent draft clauses for the 2016 finance Bill. These may have been announced before or represent little change in practice but they are all important because they all affect someone. Capital Gains Tax: disposals of UK residential property by non-residents These clauses: include non-residents’ CGT (NRCGT) in the scope […]
The progress of the additional nil-rate band for residences has been rather slow and tortuous: first the basics of Residence nil-rate band (RNRB) were set out in the Summer Budget and Finance (No.2) Act 2015 but at that time nothing was said about downsizing provisions except that there would be some. The Draft Finance Bill […]
The introduction of the Personal Savings Allowance from April 2016 effectively abolishes tax on savings for 95% of taxpayers. Both basic and higher rate taxpayers will be able to benefit although higher rate taxpayers will only be able to benefit from half an allowance. The Chancellor announced in the Budget that from April 2016 basic […]
The government made a commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of this parliament. The measures announced today have been billed as a step towards achieving this objective. The personal allowance for 2017/18 will be set at £11,500 and the basic rate limit will […]
Capital Gains Tax (‘CGT’) charged on gains realised on most assets will fall by 8% to 20% (10% for basic tax payers) from 6 April 2016. Long-term investors will be able to claim investors’ relief on gains realised after three years on disposals of new shares in unlisted trading companies resulting in many only paying […]
The latest help to buy initiative announced in the Budget will mean that the Government could be paying up to £3,000 towards a first-time buyer’s deposit. Everyone can have one but when is the best time to start? The new Help to Buy ISA is essentially a cash ISA into which the Government will pay […]
In the Budget the Chancellor announced that the Government will make amendments to the SEIS, EIS and VCT legislation to ensure that the UK continues to offer significant and well-targeted support for investment into small growing companies, in line with new EU rules. The new proposals are subject to state aid approval and the likely […]
The Chancellor claimed that the current rules for the taxation of non-domiciled individuals had ‘an important place’ and would not be dumped outright before announcing significant proposals to the current regime to make the UK tax system fairer. It’s difficult to argue that the proposals will not make the system fairer but it seems doubtful […]
As George Osbourne sits down and we reflect on the announcements of today, it looks like Owner Managed Businesses are in a better place. Reduction in corporation tax rates, permanent increase in Annual Investment Allowance to £200k and new allowance for the first £5k of dividends are offset by increases in dividend tax rates and […]
The pre-owned assets tax (POAT) was ten years old on 6 April 2015 but no party was held because nobody would have attended. Introduced as a countermeasure against inheritance tax avoidance schemes, POAT applies to anyone who disposed of an asset after 17 March 1986 who subsequently occupies or enjoys the use of that property […]
In the 2015 budget, George Osborne announced a significant reduction in the lifetime allowance for pensions from £1.25 million to £1 million. The lifetime allowance is effectively the upper limit on the value of an individuals total pensions (investment values and rights to income) that an individual may reach before suffering additional tax charges when […]
In this note we summaries some of the tax points from the main political party manifestos and highlight some issues taxpayers might like to consider (separate advice on the consequences of any action taken in response to the comments below should always be taken). If you would like to discuss any of these points, please […]
On 16 July 2015 HMRC published draft Regulations containing the proposed IHT hallmarks for DOTAS ( Disclosure of Tax Avoidance Schemes) purposes. These have attracted attention and criticism because of the breadth of their potential application. Consequences of arrangements being reportable to HMRC under DOTAS may include HMRC issuing accelerated payment notices to users of […]
The Taxation of Pensions Bill 2014 (TPB) will enact the tax changes enabling flexibility of pension draw-down. Changes were announced to the tax treatment of funds remaining in a personal pension scheme on the death of the member. Under current rules, any pay-out to the deceased’s beneficiaries is taxed at 55%. The Government is abolishing […]
The case of Routier and Venables v HMRC concerned a bequest to charity under the will of C and possible relief from inheritance tax (IHT) under IHTA 1984 s 23.
The Confederation Fiscale Europeenne (CFE) (a pan European body representing tax professionals) has published examples of specific examples of cross-border IHT problems encountered by its members.
The proposals to simplify trust exit and ten-year anniversary (TYA) charges, due to come into effect on 6 April 2015 have been modified in the consultation document Inheritance tax: A fairer way of calculating trust charges issued by HMRC on 6 June 2014. These are the new restrictions on the nil-rate band available to trusts […]
The new Inheritance and Trustees’ Powers Act 2014 (ITPA 2014), due to come into force on 1 October 2014 includes changes affecting how: intestate estates are distributed; and trustees can distribute income and capital to beneficiaries These changes apply to individuals domiciled in England and Wales at date of death. The changes are of no […]
The major part of the reform of IHT on trusts concerns the ten year charge (formally the “principal charge”) on trusts. However, proposals made in the 2013 Budget would have meant that no matter how many trusts a settlor might set up in lifetime, all those trusts could only share one nil-rate band (NRB). One […]
Individuals who have established trusts need to be aware of forthcoming changes to their tax treatment, due in April 2015. Those looking to use trusts as part of a wealth management/succession plan will need to consider whether the use of a trust is still worthwhile. The first phase of the changes aimed at simplifying the […]
The first phase of the changes aimed to simplify the way in which inheritance tax (‘IHT’) is charged on trusts will be introduced from April. Their stated intention is to be tax neutral but they look likely to increase trusts’ tax burdens. The HMRC consultation process has so far demonstrated that the position will be […]
Best (Buller’s executor) v RCC (UKFTT 03217) follows the example set in HMRC v Lockyer, executor of Pawson in refusing BPR on a property letting business. Best differs from Lockyer in facts but not in principle. The differences are that: in Lockyer the property concerned was a single furnished holiday property that was accepted to […]
The professional bodies have issued a technical release on the availability of BPR in two situations. Firstly, where shares in unquoted trading companies are held by partnerships or LLPs. Secondly, where surplus cash is held by businesses and companies, which has been increasingly common in recent economic conditions. BPR treatment of Partnership/ LLP Interest in […]
In December HMRC published a new guidance note, RDR3 which provides specific guidance on the statutory residence test (SRT). This guidance sits alongside the existing guide RDR1 – Residence, domicile and the remittance basis. Note – these are the only two guides in the RDR series so far. As at 9 January 2014 there is […]
Some, but not much, more detail has emerged about how the Government intends the new dividend taxation rules to operate from 2016/17. The Budget announcement could hardly have been thinner on detail. It mentioned a £5,000 allowance and rates of tax on dividends falling within the basic, higher and additional rate bands. At the same […]
Following lots of discussion and debate in recent years regarding the reform of inheritance tax (IHT), only a couple of minor points arose in the autumn statement. First, following a number of changes over recent years extending the exemption from IHT for members of the armed forces whose death is caused or hastened by injury […]
The Treasury consultation document, Reforms to the taxation of non-domiciles came and went briefly on 22 September and has now reappeared. Apart from changes of dates, including the deadline for responses, nothing has changed, not even the typos. Deemed domicile after residence in 15 out of the preceding 20 years The test would be of […]
It is said that the real sign that a ship is in trouble is not when the rats jump overboard but when the officers abandon it mid-voyage. If that’s the case, HMRC appears to be sinking because a number of its most Senior Members have departed in recent months. That well known magazine Private Eye […]
First-time buyers who acquired shared-equity dwellings worth up to £500,000 on or after 22 November 2017 now have no SDLT to pay and may claim back any SDLT they may have already paid. This builds a substantial extension onto the abolition of Stamp Duty Land Tax payable by first time buyers on property purchases of […]
Less than a week to go before the Requirement to Correct (RTC) deadline of 30 September 2018 elapses. RTC requires taxpayers to make a disclosure of any undeclared tax (Income Tax, Capital Gains Tax and Inheritance Tax) arising before the 6 April 2017 from offshore matters or transfers. The 30 September is also a significant […]
The UK Government has introduced a raft of legislation to address tax evasion and latterly tax avoidance. This has included; The Requirement to Correct legislation which has introduced punitive offshore penalties and extended assessing time limits for Income Tax, Inheritance Tax and Capital Gains Tax to 5 April 2021 and, Enhancing automatic exchanges of information […]
In its pursuit of stamping out tax avoidance HMRC complained to the Advertising Standards Authority (ASA) about misleading tax claims by the promoter, CDP Tax & Wealth Limited, which trades under the name Fiducia Wealth and Tax (FWT). FWT’s website advertised a tax planning scheme which it said could reduce Stamp Duty Land Tax bills […]
The Chancellor announced in his 2017 Autumn Budget that the Government will publish a consultation in 2018 on how to make the taxation of trusts “simpler, fairer and more transparent”. This won’t be the first time that the Government has consulted on trying to simplify the taxation of trusts. The last consultation in 2014 came […]
Recent changes in the domicile rules affecting an individual’s inheritance tax (IHT) non-domicile status can have serious effects on trusts they have set up. Overseas assets settled on trust when the settlor was non-domiciled are excluded property for IHT purposes which means those assets are not liable for IHT charges when they become or cease […]
We now know that inheritance tax benefits previously associated with the use of corporate structures to hold UK residential property will be removed with effect from 6 April 2017. The new rules treat the interest in the holding entity as subject to UK IHT. Previously it could be exempt in the hands of a non-UK […]
Power Adhesives Ltd. almost came unstuck when, under the guidance of their advisers, the Company adopted an inappropriate arrangement to remove the possible problem of having to repay a director’s loan account on death. The arrangement made, for non-tax reasons, would have created an IHT liability on an amount far greater than the loan itself. […]
A company almost came unstuck when, under the guidance of their advisers, the Company adopted an inappropriate arrangement to remove the possible problem of having to repay a director’s loan account on death. The arrangement made, for non-tax reasons, would have created an IHT liability on an amount far greater than the loan itself. The […]
A group of members of a limited liability partnership (LLP) have persuaded a First-tier Tribunal (FTT) judge that they are not obliged to complete their personal tax returns on the basis of the information contained in the LLP’s partnership statement (the partnership’s ‘tax return’) if that statement is incorrect. This was the second recent challenge […]
The Government today announced plans to review rules that encourage non domiciled individuals to invest in UK businesses. Business Investment Relief (BIR) allows UK resident Non Doms to bring overseas income and capital gains to the UK, tax free but only on condition of making certain qualifying business investments. In general, a qualifying business investment […]
Late changes to FB 2016, discussed in the Public Bill committee on 30 June, correct anomalies in the dividend tax rules as originally proposed. The effects of these late amendments are to make the new dividend rules work as one would have expected them to and largely as they were intended to. They are uncontroversial, […]
Committee Stage amendments to Finance Bill 2016 correct anomalies in the original clauses to ensure that the IHT residence nil-rate band provisions should work consistently when they come into force on 6 April 2017. The residence nil-rate band (RNRB) rules are complex but are intended to give additional IHT relief to many homeowners (there is […]
The result of the referendum for the UK to leave the EU was announced in the early hours today; a result with potentially very significant economic implications for the country. However, this is only the start, as the UK will not actually leave the EU for at least another two years, so whilst there is […]
Finance Act 1986 (FA 1986) s 102 treats property that an individual has given away as remaining in the donor’s estate for IHT purposes if · (s 102 (1)(a)) possession and enjoyment of the property is not bona fide assumed by the donee at or before the beginning of the relevant period (the seven years […]
On 1 February 2016 ISA changes announced in the first Budget of 2015 come into effect: · replacement of cash withdrawn (“flexible accounts”); · reinvestment of Help to Buy ISAs not applied in a house purchase. Flexible accounts Any sum withdrawn from a cash ISA may be reinvested in the same ISA or a replacement […]
Following the Autumn Statement 2014 the government has consulted on new rules for the deduction of tax at source on payments of annual interest made on peer to peer (P2P) loans from April 2017. The consultation opened on 15 July and concluded on 18 September 2015. The result of the consultation has not yet been […]
Reduction of pensions lifetime allowance As announced in the March Budget the lifetime allowance (LTA) will be reduced from £1.25m to £1m, with effect from 6 April 2016. Protection arrangements will apply. The LTA will be indexed in line with the CPI in 2018/19 and subsequent years, with the allowance always being rounded up to […]
HMRC have announced the end of self-assessment for straightforward personal tax and trust cases as part of the ‘Making Tax Easier: Simpler Payment’ move towards fully digital tax accounts and the abolition of self-assessment. Powers will be included in the 2016 Finance Bill to enable HMRC to withdraw notices issued to individuals and trusts requiring […]
The upper tribunal (UT) has turned down HMRC’s appeal in Vigne against the First-tier Tribunal (FTT) decision that “DIY-Plus” livery services provided to clients who stabled their horses with the late Mrs. Vigne were enough for inheritance tax (IHT) business property relief (BPR) to apply to the business. BPR applies to any business that is not wholly […]
HMRC has designated the market operated by The Channel Islands Securities Exchange Authority Limited as a recognised stock exchange under Section 1005 (1) (b) Income Tax Act 2007 with effect from 20 December 2013. Therefore as from 20 December 2013 all securities admitted to trading and listed on this market are: ‘listed’ for income tax […]
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