Lifetime Tax & Wealth Management Strategies

Wealth takes many forms, and Governments seek to tax it in many different ways, but offer some valuable exemptions. For more determined taxpayers, there can also be a surprising number of legitimate “loopholes” available.

In 2004 the Government introduced measures to discourage “tax avoidance” including a reporting regime for schemes designed to avoid income tax, capital gains tax (CGT) and corporation tax. Inheritance Tax (IHT) and Stamp Duty Land Tax (SDLT) were initially left outside the regime, but SDLT has been brought within it for commercial property from 1 August 2005, but not for residential property.

IHT avoidance was tackled by a new form on income tax on gifts – Pre-Owned Assets Tax (POAT). This is assessed from 6 April 2005, but can affect gifts made as part of legitimate IHT planning as long ago as 17 March 1986!

The UK tax regime favours lifetime giving, but many people cannot afford to make substantial gifts to children until later in life when they feel they are financially secure. Those with family businesses, including farms, may be able to pass them on at low tax rates. For others, the options may revolve around tax favoured pension funds, and life insurance written in Trust.

With a new pension regime in place from 6 April 2006, an independent review of your pension and retirement planning arrangements with an authorised Financial Adviser is highly desirable. If you need a referral to one we can help.

The UK has long been regarded as a good “tax haven” for foreigners who take up residence here, but specialist advice and structures are needed to keep assets outside the CGT, income tax and IHT nets.

Everyone, young or old, UK or foreign, should back lifetime tax planning strategies with Wills which should be kept up to date with changing family and personal financial circumstances.

Once advice has been taken and Wills or tax planning arrangements made, it is equally important to review them regularly. Tax law and practice change – and so do family circumstances.

For further information, and a free initial consultation, contact Helen Webster.