Some tax enquiry cases…

GIVEN THE INCREASE in property values, frozen IHT thresholds, and increasing scrutiny of trusts and estate planning by HMRC, more estates than ever are being pulled into the IHT net. One common strategy for reducing Inheritance Tax (IHT) is putting property or savings into trust. Done correctly, it can remove assets from an estate entirely, helping families reduce their exposure to tax on death. But where the arrangements are poorly implemented or the settlor remains involved, things can go badly wrong.

In today’s Shipleys Tax brief, we look at a recent Tribunal case which highlights a common – and costly – trap in inheritance tax (IHT) planning and to how to avoid this. HMRC successfully argued that over £440,000 in trust assets remained taxable on death — despite IHT planning documents suggesting otherwise. The case serves as a warning on how easy it is to fall foul of IHT rules, even with well-intentioned planning and where the practical impact of the planning is not fully thought through. With further reforms under discussion, it’s likely that reliance on informal or outdated planning will face even greater challenge from HMRC.

One common strategy for reducing Inheritance Tax (IHT) is putting property or savings into trust.

The Plan

Many individuals put property or savings into trust thinking it will reduce the value of their estate for IHT purposes. Done correctly, this can work in many cases. But done carelessly – or worse, informally – it can unravel years later, with substantial tax implications.

In essence, that is exactly what happened in a recent case before the First-tier Tribunal, where a family’s well-meaning trust planning failed to exclude over £440,000 from the estate. Despite trust documents stating the assets had been given away, the deceased’s continued involvement meant HMRC was able to include them in the death estate – unfortunately triggering a significant IHT charge after death.

A Family Trust

Back in 2000, Mr Mohammed Chugtai effectively set up two trusts, one covering a semi-detached property and shop, where his daughter lived – and the other covering a bank account into which rent and other income was paid.

In the trusts his children were named as beneficiaries and Mr Chugtai gave up all rights to benefit from the assets. But as it turned out, the reality didn’t quite reflect the legal paperwork.

Over the next 17 years, Mr Chugtai continued to live in the property, ran a retail business from the shop, and used the trust-held bank account to pay personal and household bills. Even a personal tax bill was settled from that account. When the shop was eventually rented out, the income was declared on his personal tax returns – not by the trust.

Despite trust documents stating the assets had been given away, the deceased’s continued involvement meant HMRC was able to include them in the death estate

Although his motivation was to care for a vulnerable daughter – and no one disputed the family circumstances – HMRC took the view that he never truly gave up benefit of either asset. Unfortunately for the Chugtai family the Tribunal agreed.

Why It Went Wrong

This case is a textbook example of what can go wrong when Inheritance Tax Planning is implemented without full and careful follow-through. While the legal structure appeared sound on paper, the deceased continued to behave as though he still controlled and benefited from the assets.

The Tribunal focused on what happened in practice:

• Was rent paid for living in the property?
• Why utility bills and council tax were paid from the trust-held account
• Income and savings continued to flow through the trust-held account.
• The deceased used the shop for business purposes and later for rental income.

The trust deeds clearly excluded him from benefiting. But the Tribunal was clear that actions speak louder than words and hence superseded the legal paperwork.

This case is a textbook example of what can go wrong when Inheritance Tax Planning is implemented without full and careful follow-through.

The judge even commented: “Fine words butter no parsnips” – meaning that well-drafted documents are irrelevant if they’re not matched by practical action.

The Bigger Problem: Common Tax Traps

Cases like this are more common than many realise. Clients often set up trusts with the right intentions but fail to separate themselves from the assets. This might be for practical reasons – ease of use, reluctance to let go of control, or simply not realising that everyday behaviour can have tax consequences.

Even helping a family member can become problematic. The Tribunal acknowledged that Mr Chugtai’s primary reason for returning to the property was to care for his daughter, but that, unfortunately, motive is not a defence when assessing tax liability. The benefit to him – free accommodation, access to funds – was sufficient to render the planning ineffective.

How to Avoid This Hidden Tax Trap – Basics

Inheritance tax planning using trusts can be very effective. But it must be implemented carefully and consistently. Here are some key issues to be aware of:

• Giving up ownership is not enough – you must also give up control and benefit.
• Using the same property or account after gifting it can undo the planning.
• Trust records, accounts and tax returns need to be maintained properly.
• HMRC looks at what actually happened – not just what’s written in the deed.

There are legitimate ways to mitigate IHT even where the donor continues to have some connection with the asset – but these require clear planning and robust documentation.

In this case (and with the benefit of hindsight), there were better alternatives that might have achieved the family’s goals, preserved care for the daughter, and reduced the IHT burden – but they were not followed.

Inheritance tax planning using trusts can be very effective. But it must be implemented carefully and consistently.

Final Thoughts

This case is a cautionary tale for clients and advisers alike. It shows how even well-intentioned inheritance tax planning can backfire if the legal form isn’t matched by practical substance.

Trusts remain a powerful tool for wealth protection and estate planning – but they demand attention to detail, proper administration, and a genuine transfer of benefit and control.

In some cases, personal or family circumstances can change significantly over time, making it difficult — or even impossible — to implement the original advice as intended. In such situations, it’s vital to seek timely follow-up advice to ensure the planning remains effective and compliant

If you’re considering using trusts in your IHT strategy, or if you already have one in place, now is the time to review it. The cost of inaction – as one family learned – can run into hundreds of thousands.

For further assistance or queries, please contact us.

Leeds: 0113 320 9284                                 Sheffield: 0114 272 4984

Email: info@shipleystax.com

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Please note that Shipleys Tax do not give free advice by email or telephone. This article is intended for general information only and does not constitute tax or legal advice. Clients should seek professional guidance before making any decisions.

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WITH THE INEXORABLE rise of Gen Z influencers, vloggers and digital-first entrepreneurs, HMRC is quietly sharpening its tools — and its focus. What perhaps started as hobbies, gifted skincare or side-hustle brand collabs (collaborations), has now evolved into a full-blown economy, some with an international dimension. And the taxman, no doubt, is watching…

The Taxman Really Is Watching

From YouTube and TikTok to affiliate marketing and Patreon subscriptions, content monetisation and marketing has not gone unnoticed by HMRC. In recent years, the tax authority has:

• Used AI-driven algorithms to flag high-risk accounts and cross-check undeclared income
• Secured data-sharing agreements with major platforms to identify high-earning creators
• Scanned public content hashtags like #ad or #gifted, brand mentions and sponsored posts
• Issued compliance letters and launched investigations into unreported influencer income or “free” gifts

Whether you’re being paid to promote skincare on Instagram, monetising a YouTube channel, or receiving “gifted” products in exchange for exposure, the question of taxation is not just “on trend” — it’s essential.

In today’s Shipleys Tax note, we look at the key UK tax considerations for influencers and content creators, outline common pitfalls, and offer practical advice for staying on the right side of the taxman. Whether you’re just starting out or scaling your platform into a business, these insights could save you money, stress and an unwelcome call from the Taxman.

I Didn’t Know That Was Taxable…

Many influencers don’t realise that non-cash compensation — like beauty bundles, luxury trips, free gear or affiliate perks — may all be treated as taxable income by HMRC if given in exchange for something, e.g. publicity or promotion.

We’re seeing a marked increase in enquiries from content creators caught out by unexpected tax bills, VAT thresholds, or vague records around “freebies”. The tax rules are evolving — but HMRC’s expectation is clear: if you’re earning, even in kind, it needs to be declared.

“…non-cash compensation — like beauty bundles, luxury trips, free gear or affiliate perks — may all be treated as taxable income..”

Summary Tax Rules For UK Content Creators

Whether you’re a full-time vlogger or running a content side hustle, you need to understand your obligations. Here’s what to keep in mind:

What Counts as Taxable Income?

Most forms of influencer income are taxable. This includes:

• Paid brand collaborations and sponsored posts
• Ad revenue from platforms like YouTube, TikTok or Instagram
• Affiliate marketing commissions
• Event appearances and speaking fees
• “Gifted” products or services with promotional strings attached
• Transfers of assets in lieu

Tip: HMRC values non-cash gifts at market rate. That free trip or high tech camera? It’s potentially income. However, where the item has been donated for an online review here it can get murky.

Maximise Tax Efficiency with These Key Allowances

1. £1,000 Trading Allowance

You don’t need to declare income under £1,000 — useful for micro-influencers testing monetisation.

2. Claim Legitimate Business Expenses

Claim what you use for your content, such as:

• Cameras, mics, ring lights
• Editing software
• Travel
• Home office costs
• PR, legal and accountancy fees

Tip: Lifestyle items (e.g. designer handbags) rarely qualify as business expenses. However, knowing what to legitimately claim as a business expense can greatly reduce any taxable income.

Pitfalls to Avoid

• Ignoring Smaller Payments: All income must be declared if over the threshold
• Overlooking Gifted Items: These are often taxable if given in exchange for promotion
• VAT Blind Spots: You must register for VAT if turnover exceeds the current VAT threshold.
• Poor Record-Keeping: No records could mean denied deductions or worse. Especially when Making Tax Digital for Income Tax comes online (2026) the need for good record keeping will be crucial and penalties will apply for failure to comply.

Tip: definitely use a separate bank account (any personal account will do) for social media earnings and paying for costs.

Basic Tax Planning Strategies for Content Creators

If your content is earning real money, plan ahead:

1. Form a Limited Company

Once income passes £30–50k, incorporation may offer tax efficiency:

• Corporation tax (19–25%)
• Salary/dividend flexibility
• Limited liability

2. Income Structuring

Involving a spouse/partner? Structuring as a partnership or limited company may allow you to use their allowances to save money

3. Pension Contributions

Tax-deductible and helps build long-term savings.

4. Annual Investment Allowance

Claim 100% relief on business-related capital expenses (up to £1m).

5. Flat Rate VAT Scheme

Simplifies VAT and improves cash flow for some creators.

Important: These strategies are not one-size-fits-all. Creator income structures vary — from cash to crypto, brand equity to international deals. Always seek professional advice tailored to your specific set-up before acting.

Staying HMRC-Compliant: The Five Essentials

1. Register with HMRC (self-employed or company)
2. File your Self Assessment by 31 January
3. Keep clear records of all income, expenses, and gifts
4. Budget 25–30% of earnings for tax
5. Speak to a Tax Adviser at the earliest opportunity

When to Speak to a Specialist

It is best talk to a qualified adviser like Shipleys Tax as early as possible, however we recommend the following general guidelines:

• You earnings are rapidly increasing
• You receive international payments, crypto, or equity
• You’re thinking about tax planning strategies
• You’re behind on filings or have received a letter from HMRC
• For high-earning creators and entrepreneurs, the freedom to work from anywhere presents unique tax planning opportunities that are worth exploring.

The Final Cut: Your Channel is Your Business

So treat it like one. Success online has tax consequences offline which sometimes can be overlooked. If you’re building a content brand, the HMRC expects you to act like an actual business. Set up the right structure, track your earnings, and get advice early — before the algorithm or HMRC knocks at the bedroom door.

For further assistance or queries, please contact us.

Contact Us page

Email: info@shipleystax.com

Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.

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For many healthcare professionals, particularly GPs, consultants, and dental practitioners, the NHS Pension Scheme is a valuable but complex asset. Frequent changes to pension tax rules, particularly those affecting the annual allowance (AA) and lifetime allowance (LTA), mean that failing to plan ahead can result in significant tax liabilities.

Beyond pensions, healthcare professionals also face property tax, employment tax, and inheritance tax issues—many of which are shared by high earners but have additional layers of complexity in the medical sector.

In today’s Shipleys Tax article we take a brief look at the current tax risks healthcare professionals should be aware of in 2025 and provides practical solutions to avoid unnecessary financial burdens.

…healthcare professionals also face property tax, employment tax, and inheritance tax issues—many of which are shared by high earners but have additional layers of complexity in the medical sector.

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1. NHS Pensions and the Annual Allowance Tax Trap

What is the Annual Allowance?

The Annual Allowance (AA) is the maximum amount of pension savings an individual can make each year with the benefit of tax relief. It includes contributions made by:
✔️ The individual
✔️ Their employer (NHS contributions)
✔️ Any third party

Since the NHS Pension Scheme is a defined benefit scheme, the contributions made in a tax year are irrelevant. Instead, the pension growth (pension input amount) is what matters. Any pension input exceeding the available AA is subject to tax at the individual’s marginal tax rate.

Annual Allowance in 2025

✔️ As of the 2024/25 tax year, the standard annual allowance is £60,000.
✔️ For high earners with income exceeding £260,000, a tapered annual allowance applies, reducing the available allowance down to £10,000 for those with an income above £360,000.

This means many senior doctors and consultants are still at risk of excess tax charges if their pension growth exceeds their available annual allowance.

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Case Study: Dr Sara – A GP Partner and the Annual Allowance Tax Charge

Dr Sara is a GP partner with taxable earnings of £180,000 and superannuable NHS pensionable pay of £148,000 in 2024/25.

Her NHS Pension Contributions:

✔️ Employee contribution tier rate: 13.5%
✔️ Employer contribution rate: 20.6% (+0.08% admin fee by PCSE)

Dr Sara receives her Annual Pension Savings Statement and finds that her pension growth (pension input amount) is £55,000.

Does Dr Sara Have a Pension Tax Charge?

✔️ Annual Allowance for 2024/25: £60,000
✔️ Dr Sara’s pension growth: £55,000

Since her pension growth is below the £60,000 limit, she does not have to pay a tax charge.

What If Her Earnings Were Higher?

If Dr Sara’s adjusted income exceeded £260,000, she would be subject to a tapered annual allowance, which could be as low as £10,000.

📌 Solution: Doctors and professionals with incomes above £260,000 should check their threshold and adjusted income levels to determine whether their annual allowance is reduced. They may need to use carry forward allowances from previous tax years to avoid tax charges.

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2. Lifetime Allowance (LTA) – Abolished, But Tax Risks Remain

The Lifetime Allowance (LTA) was abolished in April 2024, meaning there is no longer a limit on how much pension savings can be accumulated without triggering a special tax charge.

However, this does not mean pensions are tax-free:
✔️ When withdrawing pension benefits, the amount will be taxed at the individual’s marginal income tax rate.
✔️ Larger pension pots may push retirees into higher tax bands.
✔️ The structure of withdrawals now plays a crucial role in minimising tax liability.

A Freedom of Information request by Quilter found that before the abolition of the LTA, over 400 NHS doctors paid £11m in LTA tax charges.

📌 Solution: Doctors planning for retirement must now focus on how to withdraw pension income tax-efficiently rather than worrying about exceeding a lifetime limit.

Doctors planning for retirement must now focus on how to withdraw pension income tax-efficiently rather than worrying about exceeding a lifetime limit.

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3. Other Tax Issues Facing Healthcare Professionals in 2025

A. Property Tax: Owning a Private Practice or Rental Property

Many GPs and consultants invest in private medical premises or buy-to-let properties, but this can trigger:
📌 Higher Stamp Duty (SDLT) – 3% surcharge on second properties.
📌 Higher Capital Gains Tax (CGT) – From April 2024, CGT on property profits is 24%.
📌 Mortgage Tax Relief Restrictions – Like everyone else, doctors can no longer deduct mortgage interest fully, increasing tax bills on rental income.

🔹 Options:
✔️ Holding property through a limited company (SPV) structure may help reduce tax.
✔️ Selling property in a lower tax year can reduce CGT liability.

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B. Employment Tax: NHS Salary vs. Private Practice Income

Many doctors earn income from multiple sources, including:

• NHS salaried work
• Private practice
• Locum work

This can create tax complications, such as:
📌 IR35 Rules for Locums – If you work through a limited company, HMRC may tax you as an employee.
📌 National Insurance (NI) Charges – Higher pensionable pay means higher NI contributions.

🔹 Solution:
✔️ Optimising earnings between salary, dividends, and pension contributions can reduce tax.
✔️ Locum doctors should check their IR35 status to avoid unexpected tax bills.

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C. Inheritance Tax (IHT) and Passing on Wealth

Doctors often have high-value estates, which means 40% Inheritance Tax (IHT) could apply on anything over:
📌 £325,000 (basic threshold)
📌 £500,000 (if including the Residence Nil-Rate Band for homeowners)

🔹 Solution:

• Gifting assets before death can reduce IHT exposure.
• Making sure pension death benefits are correctly structured can avoid unnecessary tax.
• Careful use of trusts and estate planning to mitigate IHT.

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4. How Can Doctors Avoid Unnecessary Tax Charges?

– The NHS pension annual allowance is now £60,000, reducing tax charges for many doctors.

– Pension growth, not contributions, determines tax liability – get advice to calculate your pension input correctly.

– Property and inheritance tax planning can prevent surprise tax bills later.

– Use Family Investment Companies (FICs) to reduce inheritance tax (IHT) and manage long-term wealth efficiently.

How Can Family Investment Companies (FICs) Help Doctors?

A Family Investment Company (FIC) is a private limited company set up to manage family wealth, offering a tax-efficient alternative to trusts. This is particularly relevant for doctors and healthcare professionals who:

✔️ Have significant savings or investment assets.
✔️ Want to pass down wealth efficiently to their children while retaining control.
✔️ Are concerned about 40% Inheritance Tax (IHT) liabilities on estates over £325,000 (£500,000 including the residence nil-rate band).

Benefits of a FIC for Doctors:

🔹 Tax Efficiency – Corporation tax (currently 25%) on profits may be lower than personal tax rates.
🔹 IHT Planning – Shares in the company can be gifted over time, reducing the taxable estate.
🔹 Retained Control – Unlike trusts, doctors can retain full decision-making power over investments.
🔹 Flexible Income Distribution – Dividends can be paid to family members, utilising their lower tax bands.

Example:
Dr Sara, a high-earning GP, invests £1 million in a FIC instead of holding assets personally. Over time, she gradually transfers shares to her offspring, reducing her estate’s exposure to IHT while still maintaining control over investment decisions.

Key Takeaway

FICs offer long-term tax advantages and allow doctors to protect their wealth while minimising inheritance tax risks. Setting up a FIC requires careful planning and legal structuring, so consulting a specialist tax adviser is recommended.

Final Thought: Doctors and Healthcare Professionals shouldn’t have to pay more tax than necessary. With proper planning, you can navigate the bitter pill of higher taxation.

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Need Advice on NHS Pensions and Tax?

If you’re concerned about pension tax charges, property tax, or inheritance planning, speak to a specialist medical tax adviser at SHIPLEYS TAX to explore your options.

For further assistance or queries, please contact us.

Leeds: 0113 320 9284                  Sheffield: 0114 272 4984

Email: info@shipleystax.com

Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.

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