Thursday, 1 December 2016

Get ready for another ATED valuation date


The Autumn Statement on 23 November contained no further detail about how the Government’s proposals for achieving Inheritance Tax transparency for offshore structures from 6 April 2017 is going to work in practice.  However, in rather ominous fashion, the Government did use the occasion to confirm that the changes are going ahead as planned from 6 April 2017. 

Non-doms owning UK residential property through offshore trusts, companies or other vehicles need to get their skates on if they are to get any reorganisations finished by 6 April 2017 (see my blog of 3 November 2016 for one reason why doing so may be desirable).  However, there may be another good reason – some may find their company’s Annual Tax on Enveloped Dwellings (ATED) bill goes up substantially too.  Here’s why.

Thursday, 17 November 2016

Appointing joint attorneys? Here’s a welcome clarification of the law


Lasting Powers of Attorney are an essential wealth management tool for anyone who directly holds UK assets and can name at least someone whom they trust to take decisions on their behalf.  They are often made by individuals concerned about who would continue to make decisions about their finances or their health and welfare if they ever lost capacity to do so themselves.  They are increasingly popular – registrations of Lasting Powers topped 533,000 in the year to end March 2016; a 35% increase from the previous year.  The increasing number of registrations indicates that there are more Lasting Powers in circulation. 

Many clients want to appoint more than one attorney.  The Lasting Power of Attorney legislation permits the appointment of both attorneys and replacement attorneys, the latter acting as substitutes.  Joint attorneyships are not uncommon.  Take the situation of an individual – James – who wants to appoint his wife Amy and his brother Bill as his attorneys, to act jointly in relation to his finances.  His lawyer tells him that it would be prudent to name a replacement attorney too and he chooses his son Christopher.  But his son is still in his twenties and, if either Amy or Bill or both were able to act, he would like them to do so in preference to Christopher.  This simple sounding request has had English law in knots for a while. 

Thursday, 3 November 2016

Non-dom tax changes – IHT periodic charges and offshore trusts


Well advised non-doms know that UK situated assets should never be directly held by their offshore discretionary trusts.  To do so would subject the offshore trust to periodic charges to UK Inheritance Tax (IHT).  These charges comprise the entry charge, the ten year anniversary charge, and exit charges, where value leaves the trust after creation.

To avoid these charges arising, it has been commonplace for UK situs assets, such as UK real estate, to be owned by an offshore company, which in turn is wholly owned by an offshore trust.  The trust’s asset is the shares in the offshore company – non-UK situs, so the trust is not subject to periodic IHT charges as it does not directly own UK situated assets.  As a result, many non-doms have no understanding of what periodic charges are and when they apply.  However, if the Government’s proposals in their August Further Consultation come to pass, ignorance of IHT periodic charges could cost non-doms and their offshore trusts.

Thursday, 20 October 2016

Charitable giving in Wills: charity must be governed by UK law to secure IHT exemption


The UK Inheritance Tax (IHT) saving is probably the last reason why anyone would deliberately choose to leave assets to charity in their Will.  However, it is the case that leaving assets to charity is very IHT efficient, for two key reasons.  Qualifying gifts are 100% IHT exempt – the charity will not have any IHT deducted from what is left to them.  In addition, from April 2012, the estate of anyone leaving at least 10% of their net estate to charity benefits from a reduced IHT rate of 36%.  The recent Court of Appeal case of Routier & Anor v HMRC ([2016] EWCA Civ 938) is a reminder, though, that, where the Will contains a foreign element, it is dangerous to assume that the IHT charity exemption will be automatic.

Thursday, 6 October 2016

Long term UK resident non-doms set to lose remittance basis of taxation


Anyone who does not regard England as their permanent home (non-dom) but who has been resident in the UK for at least 15 out of the past 20 income tax years will wake up to a very different UK tax regime on 6 April 2017, according to a further consultation issued by the Government on 19 August. 

Thursday, 22 September 2016

Contributed to a property purchase? Here’s how to protect your investment


Buying a property is often the biggest investment a person will make in their lifetime.  It therefore stands to reason that people want to ensure that their investment is protected.  The recent case of Haque v Raja[1] provides a reminder that, if you don’t appear on the title of a registered property that you’ve contributed to and you don’t live in it as well, you must protect your interest.

Thursday, 8 September 2016

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