In the midst of current uncertainty, many of us have been prompted to get our affairs in order. In doing so, it's worth considering that proactive, careful tax planning can reduce the taxes payable on your estate.
In this edition, our experts delve into effective ways to reduce both Inheritance Tax (IHT) and Capital Gains Tax (CGT) with three different tax reliefs and exemptions. We also highlight a lesser known tax relief for investors. And finally, with HRMC taking stronger action to crack down on tax evaders, we provide advice to help you prepare for enquiry and mitigate any risks.
Have you considered a charitable bequest to reduce Inheritance Tax?
As businesses continue to feel the economic impact of COVID-19, some senior employees and shareholders are offering to waive their agreed salary and/or dividends to cashflow. We highlight the importance of implementing this properly with the correct documentation to avoid an unwanted tax bite.
Making the most of Gift Relief on the transfer of business assets
With a CGT rate increase becoming more and more likely, you may wish to consider taking advantage of Holdover Relief (more commonly known as Gift Relief). This will enable you to transfer certain business assets to relatives or business partners for less than market value.
Gifts out of excess income – tax saving gifts
Giving away surplus income as a gift is considered another effective way of planning for the future and reducing liabilities on your estate. But how do the rules regarding gifts work in practice? It could be worth utilising the ‘gifts out of excess income’ tax exemption if you meet the conditions. Click below to find out how the exemption works and whether you could make a saving.
The all too often forgotten Investors' Relief
Have you utilised your Entrepreneurs’ Relief lifetime limit? If so, you could get an additional £10 million limit under Investors’ Relief. Many people aren't familiar with Investors’ Relief, however it’s now a potentially far more attractive relief for investors. Read more about the relief here, and why it's important to consider whether you meet the relevant requirements.
Offshore trustees - don’t panic – we’ve been there before
One of the main points of interest in the Office for Tax Simplification (OTS) review has been the suggested alignment of CGT rates with income tax. This takes us back to 1998, when Nigel Lawson did just that. Much has been said about the effect on entrepreneurs selling their companies. But it also has the potential to hit beneficiaries of offshore trusts particularly hard.
HMRC further increase efforts to reduce tax evasion
With HMRC’s increased focus on tax evasion regularly making the news, individuals should brace themselves for an enquiry into their tax affairs. By preparing for the worst, you can ensure both the costs and worries of an enquiry are kept to a minimum. Find out how you can prepare by clicking below.