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Generation skipping
If your child is grown up and financially secure, it may be worth ‘skipping’ a generation, as income from capital gifted by grandparents or more remote relatives will usually be taxed as the child’s, as will income distributions from a trust funded by such capital.
Marriage breakdown
Maintenance payments do not usually qualify for tax relief. The special CGT and IHT treatment for transfers between spouses applies throughout the tax year in which separation occurs. For CGT, transfers in subsequent years are dealt with under
the rules for disposals between connected persons, with the disposal treated as a sale at market value, which could result in substantial chargeable gains. For IHT, transfers remain exempt until the decree absolute. Timing is crucial; we can assist you.
A contingency plan
Contingency planning could help to protect your family if you die or become incapacitated. This might include taking out adequate insurance cover, perhaps with life assurance written into trust to ensure quick access to funds. It is also essential to make a Will. We also strongly recommend that you and your spouse:
y make a living Will (also called ‘advance decisions’): so that your wishes are clear with regard to medical treatment in the event that, for example, you were seriously injured following an accident
y execute a lasting power of attorney: so that if you become unable to manage your affairs as a result of an accident or illness, responsibility will pass to a person of your choosing.
Remember to tell your spouse, your parents and your business partners where your Will and related documents are kept. If you are passing on responsibility for managing your affairs, it might be advisable to talk matters through with them.
Unclaimed assets?
Billions of pounds of assets lie unclaimed in the UK! To see if you have lost assets contact the Unclaimed Assets Register on 0333 000 0182 or visit www.uar.co.uk (NB: a charge applies for this service). To find out if you have an unclaimed Premium Bond prize, call 08085 007 007 or visit www.nsandi.com.
Non-UK domiciles
A UK resident and domiciled individual is taxed on worldwide income and gains. Non-UK domiciles who are UK resident can claim the remittance basis of taxation in respect of foreign income and gains, with the effect that they are only taxed if foreign income and gains are brought into the UK. They will however lose their entitlement to the personal allowance for income tax and the annual CGT exemption. There may also
be a significant ‘remittance basis charge’ to pay. The non-UK domicile is also potentially favourably treated for IHT, as they only pay IHT in respect of UK assets, as opposed to their worldwide assets.
An individual who has been resident for at least 15 of the last 20 tax years will be deemed UK domiciled for all tax purposes. In addition, those who had a UK domicile at the date of their birth will revert to having a UK domicile for tax purposes whenever they are resident in the UK, even if, under general law, they have acquired a domicile in another country.
Will
Living Will
Lasting power of attorney
Life assurance
Keep papers in a safe place, and make sure other people know where they are!
Seriously consider:
Income, mortgage and loan protection insurance
Tax-efficient estate planning
Planning for the transfer of your business
Funeral arrangements and expenses
A tax-efficient gift strategy
Checklist: financial protection strategies
Self
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Spouse
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Essential:
Your next steps: contact us to discuss...
y Making the most of allowances and reliefs
y Ensuring that your tax liability is kept to a minimum
within the law
y Using savings, capital and other vehicles to give your children a better start in life
y Writing a Will
y Life insurance and obtaining disability and critical
illness insurance
y Tax-efficient savings and investments
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