Asset Protection examples…
Company Assets – Ring Fencing
Client A wished to remove a commercial property from his business as part of an asset protection planning exercise. The property was demerged away from the trading business and effectively ring fenced; this transaction was commercially driven. There was limited stamp duty exposure of 0.5% on this transaction and no other taxes.
Comment: Asset protection is fundamental consideration when entering or embarking on new ventures, it is key that the transactions to protect assets are commercial/investment driven.
Private Assets – Trusts
Client B wished to gift assets to his family members whilst retaining an element of control. The client was concerned about potential claims against the beneficiaries in the future by spouses, trustees in bankruptcy etc, therefore the gifts were made into a relevant trust which provided the desired protection.
Comment: In order to provide real protection the trust has to be properly constituted, the correct type of trust must be used and not be a sole beneficiary trust as the courts have looked through such trusts in recent cases.
Offshore and Domicile
X individual had a sizeable portfolio of residential investment properties. We restructured the tax affairs to transfer the properties into an offshore company without triggering any taxes, all with HMRC clearances (which in our mind are essential for comfort).
As the individual was non UK domiciled for inheritance tax purposes, the strategy avoid IHT on the portfolio immediately, hence saving £2.1M, whilst operationally not affecting how the business was operated.
Latest news & blogs…
THE CHANCELLOR Jeremy Hunt belatedly announced his Autumn Statement today heralding a new phase of austerity and sneaky tax rises.
Here at Shipleys Tax we briefly look at what’s changed… again.
The Chancellor maintained that there were no increases to the headline rates of tax. However, this is somewhat misleading and does not mean that individuals won’t pay more income tax, quite the opposite in fact.
- The threshold at which the 45% rate of income tax kicks in will be reduced from £150,000 to £125,140 from 6 April 2023.
- The personal allowance will remain at the current level until April 2028. As wages are increasing, albeit at a lower rate than inflation, this means that earners will start to pay income tax. The freeze on the 40% tax rate threshold is paid has also been extended by two years to 2028.
- The tax-free dividend allowance will be cut to £1,000 from April 2023 then to £500 the from April 2024.
The employment allowance will remain at the current level of £5,000. The main NI thresholds will also be held at the current level until April 2028 meaning the amount businesses and individuals pay will increase.
Capital gains tax (CGT)
There is no change to the CGT rates, but the annual exempt amount will be cut from £12,300 to £6,000 from 6 April 2023, and then to £3,000 from April 2024.
Corporate Tax changes
- Confirmation of the increase in Corporation Tax to 25% from April 23.
- The £1 million level of the Annual Investment Allowance is being made permanent.
- R&D tax reliefs – for expenditure on or after 1 April 2023, the SME additional deduction will decrease from 130% to 86%.
Stamp Duty Land Tax (SDLT)
The increase in stamp duty land tax allowances to £250k for residential property will be retained, but only until 31 March 2025.
- Electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
- First Year Allowance for electric vehicle chargepoints – 100% First Year Allowance for electric vehicle chargepoints will be extended to April 2025.
- IHT – the nil rate band which is the amount an individual can leave tax free on death, will be frozen at £325,000 for a further two years until 2028.
- The energy profits levy will increase to 35% from 25% and extended from four to six years.
- National living wage to increase to £10.42 per hour from 1 April 2023.
- Tax avoidance – the government is investing a further £79 million over the next 5 years to increase HMRC’s capacity to tackle serious fraud, and to reduce non-compliance among wealthy taxpayers.
If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email firstname.lastname@example.org.
Please note that Shipleys Tax do not give free advice by email or telephone.
THE NEW CHANCELLOR has today scrapped most of the mini-Budget announcements made by his short lived predecessor. What, if any, of the announcements made by Kwasi Kwarteng survived the latest round of U-turns?
In today’s brief Shipleys Tax blog, we look at the latest round of fiscal policy announcements, which may or may not stick around.
What’s left from the mini-Budget 2022
The Chancellor, Jeremy Hunt, announced today that the cutting of the basic rate of income tax (from 20% to 19%) would be postponed indefinitely – at least until “economic conditions allow a reduction”.
This had been rumoured toward the end of last week, but that wasn’t the end of the U-turns. The planned cutting of dividend tax (which was increased in line with National Insurance) has also been scrapped, as has the reversal of the controversial off-payroll working/IR35 rules. The cap on energy bills that was set to last for two years will now, however, be reassessed in April.
What has remained?
The only major measures that remain from the mini-Budget are the changes to National Insurance (1.25% cut retained), increase in the stamp duty land tax allowance, and the permanent increase of the annual investment allowance to £1 million.
More to follow.
THE EMBARASSING farce continues at Westminster with more twist and turns than reality TV. The PM Liz Truss has today overseen more U-turns to her now defunct flagship fiscal policy – the Mini-BUdget 2022.
Here at Shipleys Tax we look at the new merry-go-round of announcements made today. Quite how long these policies will last is anyone’s guess.
NEW Summary Budget measures – 14 October 2022
- Income tax
45% Additional rate abolished (40% top rate now)SCRAPPED – 45% top tax rate to be reinstated
- Basic rate cut to 19% (from 20%) – RETAINED FOR NOW
- NIC – April 2022 increase in NIC reversed from 6 November and Health & Social Care Levy scrapped: RETAINED
Corporation tax to remain at 19% – planned 2023 increase to 25% cancelledSCRAPPED – Rise to 25% reinstated
- Off payroll working/IR35 – previous legislative changes to be repealed from April 2023 – RETAINED
- Introduction of VAT-free shopping for overseas visitors – RETAINED
- New “Investment Zones” with enhanced tax reliefs and relaxed planning frameworks – RETAINED
- Removal of cap on bankers’ bonuses – – RETAINED
- SEIS and CSOP limits to be increased. EIS and VCT reliefs will be extended beyond 2025 – RETAINED
- Annual Investment Allowance to stay at £1m for capital allowances – RETAINED
- No stamp duty on first £250,000, for first time buyers that rises to £425,000 – comes into operation today- RETAINED
All policies subject to change. Further detail to follow.