Thursday, 16 June 2016

Second marriage spouses and Wills: three key bear traps to avoid


Second marriage spouses sometimes have Wills that do not leave their assets to their second spouse outright.  This is particularly the case when there are children from the first marriage and the intention is to ensure that everyone – the second wife and the children from the first marriage – receive something.  For some clients, this can be a hard balancing trick to get right but careless will drafting can make the situation a lot worse.

Thursday, 2 June 2016

Corporate beneficial ownership registers – where are we now?


In my last blog, I looked at automatic exchange of information regimes and this blog carries on the transparency theme but in the sphere of corporate transparency.

Britain is ‘having a transparency moment’, as some might say.  Regular readers of this blog will know that Britain has already introduced a public register of beneficial ownership and control of UK companies and Limited Liability Partnerships (see my blog of 24 March 2016), being the first of the G20 countries to do so.  However, it appears that matters will not stop there.

Thursday, 19 May 2016

Trustees and the Common Reporting Standard (CRS)


As if FATCA wasn’t enough, UK trustees will have to get to grips with two new reporting regimes next year – the CRS and the European Directive on Administrative Cooperation, or DAC.  The DAC is how the OECD’s Common Reporting Standard (CRS) will be implemented by the EU. 

Thursday, 5 May 2016

Pension death benefits and spousal bypass trusts: time to review


April 2015 saw another radical overhaul of the taxation of UK pensions on death.  Gone is the 55% tax charge on payment of a lump sum death benefit after death, if the pension member either died after their 75th birthday or died pre-75 having already entered into drawdown.  Instead, pension payments from a money purchase pension can now be paid to the member’s nominated beneficiary in the form of either a lump sum, annuity or flexi-access drawdown and no 55% charge is payable at that time.  The nominated beneficiary is taxed at their highest marginal rate of Income Tax in respect of any benefits received.  In addition, the nominated beneficiary can pass on any remaining funds tax free on their death. 

Many defined contribution private pension schemes are set up as trusts so that, on a pension member’s death, the pension trustees decide whom to pay any lump sum death benefit to.  Members are encouraged to sign a letter of nomination – slightly misnamed as the letter is not binding on the pension trustees in any sense.  The rules of certain pension schemes permit the lump sum benefit to be paid to a trust set up by a member in lifetime, often referred to as a spousal bypass trust.  This is also, on its face, a misnomer because it is commonplace for the spouse to be a potential beneficiary of the trust, along with the children, and usually the intention was that the spouse would benefit from it during their lifetime. 

Thursday, 21 April 2016

To keep or not to keep Wills with Nil Rate Band trusts?


Chances are, if you’re British, married and have a professionally drawn Will which predates 2008, you may have a discretionary trust of the Inheritance Tax Nil Rate Band (NRB) in it.  It is often called something like the ‘Legacy Fund’ and, while the exact words may differ, the Will usually provides for a gift of the NRB (currently £325,000 if fully available) to trustees to hold on discretionary trusts for the benefit of the surviving spouse and children.

Having any trust in a Will needs careful thought.  Will trusts add complexity and usually cost something to run after a death occurs.  It is always much simpler for married couples to leave everything to the surviving spouse outright in their Wills, if that is what is desired.  So it’s important to be clear, if you have a NRB trust in your Will, what benefit it may bring your heirs.

Thursday, 7 April 2016

Higher SDLT rates for additional residential purchases: planning points


Here we are in the brave new world of higher Stamp Duty Land Tax (SDLT) rates for certain residential property purchases.  As from 1 April 2016, anyone buying an additional UK residential property, such as a second home or buy-to-let, faces paying a surcharge of 3% above the standard SDLT rates (see my blog of 14 January 2016 for further details of the changes as they were announced in the Autumn Statement 2015).

UK residential property remains a popular investment class for many people who already own their own homes, so are there any planning opportunities?

Thursday, 24 March 2016

Trustees and the PSC Register


From 6 April 2016, virtually all UK incorporated companies (and LLPs, but in this blog I’ll refer to companies only) will have to maintain a register of individuals or entities who control them.  As a result, individuals who either own, directly or indirectly, more than 25% of the shares or voting rights of such companies, or who hold the right to appoint or remove a majority of directors or have the right to exercise, or actually exercise, significant influence or control over the company may receive a notice from the company requiring them to provide information for inclusion on the People with Significant Control (PSC) Register. 

Trusts (UK or offshore) are caught by these new provisions too because the law provides that, if the trust were to be regarded as an individual and, as such, would satisfy any of the above conditions, then those persons who exercise, or have the right to exercise, significant influence or control over the trust are PSCs that need to appear on the company’s PSC Register.