In my 13 March 2014 blog on ‘Trusts and the EU’s Fourth Anti-Money Laundering Directive’, I highlighted the EU Parliament’s plans to introduce a register of settlors, trustees and beneficiaries of trusts, as set out in the draft of the Fourth Anti-Money Laundering Directive. The Directive has now been finalised and, whilst it looks as though the register will still go ahead, the number of trusts affected will be reduced and trust information will not be placed on a publicly available register.
Thursday, 5 February 2015
The recent case of Hutchings v HMRC  UKFTT 0009 (TC) will be of interest to anyone acting as executor/administrator of an estate and anyone who is a beneficiary. Like the sword of Damocles, HMRC was dangling a tax penalty of £87,000 over the heads of both the executors and one of the beneficiaries – but which one of them would take the rap? The Tax Tribunal’s reasoning for their decision is fascinating stuff.
Thursday, 22 January 2015
As a general rule, Inheritance Tax (IHT) is payable on the net value of assets. In other words, debts are generally deductible when calculating what a person is worth for IHT purposes on death. However, the Finance Act 2013 introduced limitations on the deductibility of certain debts. Judging from a few cases that have come to my attention recently, business owners still remain blissfully unaware of the impact of these changes on them. Time for a quick reminder, then.
Thursday, 18 December 2014
One of the bigger surprises in this year’s Autumn Statement was the news that the much consulted upon new ‘Settlement Nil Rate Band’ has been dropped.
One of the reasons for proposing a Settlement Nil Rate Band was to make the use of multiple trusts less attractive for Inheritance Tax (IHT) mitigation purposes. Each trust would no longer have its own IHT nil rate band to set off against the periodic charges to IHT, such as the ten year anniversary charge and any exit charges, that it may face during its existence.
Now, with the publication of draft clauses for the Finance Bill 2015 last week, we learn that, in certain situations, there remains a future for planning involving multiple trusts after all.
Thursday, 4 December 2014
My 24 April 2014 blog reported that buried within the Government’s March 2014 consultation on extending Capital Gains Tax (CGT) to non UK residents was a change to CGT Principal Residence Relief (PRR) affecting UK residents.
Last week, the Government published its response to the consultation and confirmed that PRR is set to change. The changes are not as envisaged in the consultation document though.
Thursday, 20 November 2014
Preserving family wealth is uppermost in many families’ minds. Therefore, knowing how structures created to hold family wealth will perform in the event of a family member divorcing is crucial.
Unfortunately, the treatment of trusts on a beneficiary divorcing is to some extent uncertain. The legislation is clear enough: anyone with an irrevocable, fixed interest in a trust (e.g. life tenant/capital remainderman) can have their interest transferred to their spouse or child in the event of a divorce or separation. The terms of ‘nuptial settlements’, be they discretionary or fixed interest, can also be varied to permit a spouse and/or children to benefit. Therefore, trusts that want to remain outside the divorce courts will take care not to be regarded as nuptial settlements.
Thursday, 6 November 2014
Threats to wealth come in many guises. Mr Southwell was described by the judge in Southwell v Blackburn at the Court of Appeal as ‘shrewd, cautious and guarded’. He knew that if he married Ms Blackburn, who had two children from a previous marriage, she would have a financial claim against his assets in the event of divorce. He also knew that, when he bought a property for her and her teenager children to live in with him, putting her on the title with him would be risky too, so he made sure that didn’t happen either. He bought the property with the help of a repayment mortgage and he made all the repayments. Exemplary thus far.