Tax and Succession
Under Scots law, trustees can act by a majority decision of the trustees, unless the trust deed states otherwise. All of the trustees must be consulted prior to any decisions being taken. The trustees’ principal duty is to exercise their powers in the best interests of the beneficiaries of the trust.
From 6th April 2017 a new inheritance tax relief has been available, known as The Residence Nil Rate Band (RNRB). The RNRB is in addition to the existing Inheritance Tax Nil Rate Band (the value of an estate which is not subject to Inheritance Tax) which has been frozen at £325,000 for each individual until 5th April 2021.
HMRC has introduced new regulations requiring the registration of trusts. All trusts with a UK tax liability must be registered on the new Trusts Registration Service (TRS) online portal held by HMRC.
Inheritance tax, or IHT, is chargeable on everything of value. Although usually associated with death, IHT is also levied on certain lifetime transactions. To demonstrate how it all works in practice, we have put together a basic guide to IHT.
Family investment companies are a means of gifting assets for inheritance tax (IHT) purposes while retaining control over the investment and use of the funds gifted. Until 2006, trusts were more commonly used for this purpose. However, since 2006, gifts to a trust in excess of £650,000 are subject to an immediate inheritance tax charge at 20%. Family investment companies (and family partnerships) seek to mimic some of the controls available from a trust without an upfront IHT charge.
A Lasting Power of Attorney (LPA) is an English form of attorney. It is a legal document authorising someone (the Attorney) to make decisions on behalf of someone else (the Donor).
Reviewing Your Tax and Financial Affairs 2016/17
In the Summer Budget of 2015, the Government announced it would change the tax regime for individuals who have a foreign domicile (“non-doms”). The first consultation was published on 30 September 2015 which set out the detail of the proposals.
There have been a few changes announced over the last year regarding the taxation of property income which are of relevance to anyone owning, or contemplating ownership of, UK residential property.
From 17th August 2015, Brussels IV will be binding on EU Member States except for the UK, Ireland and Denmark. The main reason why the UK has chosen not to opt in to Brussels IV is because it may oblige the UK to apply clawback provisions contained in the law of other member states. The government considers this would cause unacceptable uncertainty in relation to lifetime gifts (particularly gifts to charities and trusts) and land registration.
As announced in the Chancellor’s Summer Budget last year, the tax regime for dividends changed dramatically with effect from 6th April 2016. The changes will affect taxpayers in widely different ways, depending on the level of their dividend receipts and other income.
The Budget announced a welcome reduction in the rates of Capital Gains Tax (CGT) by 8% from April 2016. This will mean that the rate of CGT paid by higher-rate taxpayers will reduce from 28% to 20%. The 18% rate applying to basic-rate taxpayers will also reduce from 18% to 10%. This will mean significant tax savings for those disposing of assets such as shares (outside of an ISA), where their gains in a tax year exceed the annual exemption.
A factsheet intended to provide guidance on Gift Aid; Inheritance Tax; payroll giving; tax relief on shares; land or buildings and personal charitable trusts.
For many years the Government has been committed to creating and sustaining an environment which offers tax incentives to individuals to make gifts to charities. There are several tax efficient ways in which an individual can give to charity.
A new measure to incentivise charitable giving on death was introduced on 6th April 2012. Where someone dies on or after that date and leaves at least 10% of their net estate to a qualifying charity or charities, the rate of inheritance tax on the chargeable part of their estate is reduced from 40% to 36%.
In its draft Budget on 16th December 2015, the Scottish Government announced its intention to introduce a 3% Land and Buildings Transaction Tax (LBTT) surcharge on the acquisition of certain dwellings. This followed an announcement by the UK Government in November of its intention to levy a 3% Stamp Duty Land Tax (SDLT) surcharge on the acquisition of certain dwellings.
With attention focused on the Smith Commission Report and the debate around devolved taxes, it would be easy to overlook the introduction of the Scottish rate of income tax in April 2016.
On 29th June 2015, the Scottish Government issued a consultation paper on the Law of Succession (www.gov.scot/Resource/0048/00480484.pdf). The consultation is open for written responses until Friday 18th September 2015. The consultation paper is based on the Scottish Law Commission’s 2009 Report on Succession (Scot Law Com No. 215) and is seeking views on the main proposals put forward in that report for some fundamental reforms of succession law in Scotland.
On June 16th 2015, the Succession (Scotland) Bill (“the Bill”) was introduced to the Scottish Parliament. The Bill deals broadly with some technical amendments to the law of succession.
The transition from the former Single Farm Payment (SPF) Scheme to the new Basic Payment Scheme is now well underway. As farmers and landowners try to understand how the new scheme will operate and what it will mean for them, the transition does bring with it a potential tax benefit that would be easy to overlook.
The Chancellor announced in the 2014 Budget that capital gains tax would apply to disposals of UK residential property by non-UK residents from 6th April 2015. A consultation on the proposal was held and the Government has published its response to the consultation. Draft legislation has now been published giving more detail on the proposed changes. The draft legislation will be included in the Finance Bill 2015 and apply from 6th April 2015.
From April 2015 Stamp Duty Land Tax (SDLT) will be replaced in Scotland by Land and Buildings Transaction Tax (LBTT) which will be the first fully devolved Scottish tax. The relevant legislation can be found in the Land and Buildings Transaction Tax (Scotland) Act 2013, which was passed by the Scottish parliament on 25th June 2013.
In 2011 the Government announced its intention to introduce a new statutory test of residence for tax purposes. The statutory residence test applies from 6 April 2013.
Agricultural property can attract relief from inheritance tax at 100% or 50%, both on death and in respect of lifetime transfers. The relief is subject to certain restrictions...
Turcan Connell discusses why, when a person gifts assets during their lifetime, subject to certain exemptions, there are a number of different variable to consider.
Turcan Connell looks at how certain assets claimed as 'business property' attracts valuable reliefs from inheritance tax, at 100% or 50% both on death an in respect to lifetime transfers.
An EFRBS is an unapproved pension scheme set up by an employer to provide retirement or death benefits for senior executives or employees and their families.
This note covers the tax treatment of investments qualifying for the Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).
An important inheritance tax (IHT) decision for estate owners issued by the Tax Tribunal in the Brander Case.
Under Scots law a surviving spouse, civil partner and children are entitled to certain legal rights when a person dies with or without a will. These rights are known as Legal Rights.
In its drive to tackle tax avoidance the Government is introducing three new measures designed to discourage the use of companies and other corporate vehicles to hold high value residential properties, a practice which is referred to as “enveloping”.
Under the UK tax rules, domicile is a broad concept which is determined by the courts rather than legislation. Domicile is not necessarily where someone is born or their nationality, but a test of where someone regards as home.
The Government raised the prospect of a general anti-abuse rule (GAAR) in the June 2010 Budget. Following a report by Graham Aaronson Q.C. in November 2011 and a Government consultation document in June 2012, a revised form of the GAAR legislation was published in December 2012.
From April 2015 Stamp Duty Land Tax ("SDLT") will no longer apply in Scotland and, as provided for in The Scotland Act 2012, the Scottish Parliament has the power to set a tax on land transactions from that time. The Scottish Government has already consulted on "Taking Forward a Scottish Land and Buildings Transaction Tax" and has just published the draft legislation (the Land and Buildings Transaction Tax (Scotland) Bill) which is scheduled to be enacted in the summer of 2013.
A Venture Capital Trust is designed to encourage individuals to invest in a range of small, higher-risk trading companies whose shares and securities are not listed on a recognised stock exchange.
The Scotland Act 2012 has the potential to bring about the biggest changes to taxation in Scotland since the 1980s. David Welsh sets out what the financial section of the Act means for you and how your personal finances could be affected by the changes.
An Employee Benefit Trust is a trust which can be established either in the UK or offshore and which is set up by a company to hold cash and other assets as a tax efficient way to provide benefit to employees and their families for the purpose of attracting and retaining quality staff.
Parents or grandparents wishing to gift assets to children or grandchildren as part of inheritance tax (IHT) planning have traditionally tended to use trusts as the preferred wealth planning structure.