Inheritance Tax Planning Property Portfolios · Inheritance Tax Planning •Head of Private Client...
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Inheritance Tax Planning Property Portfolios presented by Pickerings Solicitors Emma Harrison 9 th February 2017
Transcript of Inheritance Tax Planning Property Portfolios · Inheritance Tax Planning •Head of Private Client...
Inheritance Tax PlanningProperty Portfolios
presented by
Pickerings Solicitors
Emma Harrison
9th February 2017
Pickerings Solicitors
• Based in Tamworth
• Serve the Midlands/Staffordshire area
• Comprehensive legal advice service
• Solicitors that specialise
• Holistic estate planning advice
• Collaborative working method
Inheritance Tax Planning
• Head of Private Client at Pickerings
• 20 years experience
• Team of four specialist solicitors
• Holistic estate planning advice
• Collaborative working method
Inheritance Tax
Inheritance TaxThe Basics
• Applies to value of worldwide estate on death
• Includes any assets gifted in previous 7 years
• Includes assets placed in Trust in previous 14 years
• Includes assets gifted where a benefit is still received
Inheritance TaxThe Basics
• £325,000 tax free allowance
• Additional allowances for Business and Agriculture (up to 100%)
• Roll over relief between spouses
• April 2017 Residence Relief introduced
Inheritance TaxEstate Planning
• Everyone is different
• Need to look at the whole picture
Lifestyle (now and future)
Income Needs
Family Situation
Asset Structure
Inheritance TaxOptions
• Gifts – 7 Year Rule
• Trusts
where its not appropriate to gift direct
to keep assets outside the estate
• Insurance
• Financial Products
Inheritance TaxOptions
• Good planning takes time!
Inheritance TaxProperty Portfolios
• Issues:
Often provide an income that cannot be lost
Do not qualify for BPR
Unlikely qualify for Residence Relief
Capital Gains Tax (18% or 28%)
Stamp Duty Land Tax (3% premium)
Often subject to mortgage
Inheritance TaxProperty Portfolios
• Solutions
Outright Gifts
Debt Structuring
Insurance
Trusts
Company Structures
Outright Gifts (person to person)
• Must survive the gift by 7 years
– Taper relief may apply if death does occur in 7
years
– Can be affected by any trusts created in the 7 years
before the gift
• Must not retain any benefit
• Deemed disposal for CGT
• No SDLT (provided no money changes hands)
Debt Structuring
• Two possibilities:
– Increase debt on the portfolio and gift the cash
• Allows retention of income but reduces the capital value
in the estate
• No CGT/SDLT
• Same rules apply to the cash as previously mentioned
– Replace mortgage on personal residence to
investment properties to maximise Residence NRB
Insurance
• Simplest ideas are often the best
• Identify potential tax liability and insure for
that sum
• Ensure the policy is nominated!
• Usually only a short term solution due to
premiums but can be less than loss of income
and tax bill of gifting assets away.
Trusts
• Can retain control as a Trustee but no benefit
• Protection of the assets from folly
• 7 year rule applies
• Capital Gain can be “held over” into the Trust
• Potential ability to retain an income by loaning
the assets to the Trust and being repaid via rent
• SDLT will apply
• Difficult to obtain mortgages
Incorporation/F.I.C.s
• Will not qualify for BPR
• Transfers in will be subject to CGT
• SDLT on value not consideration
• Different classes of shares
• Can be beneficial for income tax
• Use of Trusts to hold shares for beneficiaries
• FIC shares can only be held by family
• New Buy to Let Mortgage products
What now?
What now?
• Tax planning is not “One size fits all”
• It is not always a one solution strategy
• There needs to be joined up planning
• Regular review
• Involve good advisers
– Solicitor
– Accountant
– Financial adviser
Contact Us
Pickerings Solicitors
Etchell House
Etchell Court
Bonehill Road
Tamworth
B78 3HQ
01827 317070
