Sample Q&A's

Tax Question: Hi all, I appear to be in 'check-mate' in the following scenario. Could you please let me know if there is any possible way out. Mother in law officially made a very open loan to us of 70,000 GBP in 2006 that was only expected to be repaid if we could afford it and in our own time or in the extreme if she needed it urgently for future health care. The money was used towards the purchase of a property in France. The property was resold at a loss in september 2014 but repayment of the 70,000 GBP was not required(we did not officially repay the money) but given to my wife(only daughter)as deposit on a house in the UK. Parent has very recently died. IHT is going to be due on the estate. Will the 70,000GBP be considered a loan and added to the total estate or can it be considered a gift and so eligible for some taper relief, thus reducing the IHT bill. Hope all this is comprehensible and thanks in advance. A....keep reading

Tax Question: Hello, I am planning on making an e-business [selling online advertisement on my website] and my goal is to avoid CGT and corporation tax in the UK [after I eventually move out of the UK]. I want to stay in the UK to get my business started, and move out if it becomes successful. I have considered several options and I might be choosing to do this: 1] I want to create a holding in Malta, it will be Malta-domiciled [so I assume I wouldn't need to reside there if I own a house there, is that correct?]. This holding will receive the entire revenue from the advertisement I sold. 2] Then, I create a UK subsidiary of this Maltese holding. This subsidiary will be used to receive a small deposit from my UK clients as a guarantee. This deposit will be refunded to the client after 10 days. Therefore, there will be NO profit in this UK subsidiary. Also, I might want to reward my clients with some bonus money so I would want to wire transfer some money from my Malta bank accoun...keep reading

Tax Question: Hi, My wife and I have two Buy-to-Let [B2L] properties and our own house, but we are 40% tx payers. All three properties are mortgaged. We are considering another B2L, and wondered about the benefits of purchasing via an LLP or company [either of which would need to be set up]. An LLP looks quite attractive as we are looking to the longer term as retirement income in c.10 years' time. However, it also seemed interesting to see whether the B2L income could be used for paying university fees/living expenses [i.e. two children that would become partners on reaching 18 years of age] as the income could be diverted to them and fall within their tax allowance. Finally, we would be looking in the much longer term as a means of minimising inheritance tax. Questions: 1] Should we be looking to set up an LLP in the short term? 2] What happens to STLD on purchasing a property? 3] What would be the implications of transferring the existing B2L properties to the LLP? 4] Can we e...keep reading

Tax Question: Re: LLPs with Corporate Members Hi Lee Thanks for your previous answer, much appreciated. If you have an LLP as a trading entity and its partners are 2 people [husband and wife] plus a Ltd Co, we now have to take care not to allocate a disproportionate profit to the Ltd Co - at least as I understand the new rules. So if the LLP makes say ?120k and allocates ?40k to each partner, then that is near perfect use of personal allowances etc. Question 1: If the profits rise to ?160k and this is allocated ?40k to each individual and ?80k to the Ltd Co, I assume this could be targeted as disproportionate? Or does disproportionate not kick in until it gets very extreme like 10%, 0% ad 80% alocations? Question 2: If this example is disproportionate, then couldnt the LLP take on a 4th partner - another Ltd Co and again allocate profits equally between the 4 to achieve the desired outcome? Question 3: Indeed couldnt the number of Ltd Co's not increase in line with profit gr...keep reading

Tax Question: Hi French person [non-dom] has become UK resident from 31 Dec 2013 and will be taxed on remittance basis. He has Panama company - of which he is a majority shareholder BUT NOT director. The above company has cash, etc. Can the CFC rule apply and if so how? Thank you for your advise....keep reading

Tax Question: Dear, I would be grateful if you could answer the following 4 queries. Assume I loan my two working age children capital to buy a house as joint tenants; in which both they and my wife and I will all live together. The capital interest being repayable when the property is sold. On subsequent sale: 1) Will I need to pay tax on the interest? 2) If so at what rate? 3) Any way the interest can be reduced? 4) OR Cannot the children simply give the house back to me so I can then sell it under PER seeing as I initially funded the whole purchase? Thanks in advance for your reply....keep reading

Tax Question: Taxable income ?7,000 Net CGT gain [after deducting all expenses]> say ?49,370. Am i right if i compute my CGT liability as eg: 34370-?7000=27,000 -10,600=?16,400 @ 28% = [b] pay 4592.00 ..... ?34,370 @ 18% = [a] pay 6186.60 Total CGT ?10778.60 if not so then pls can you show me how to calculate above scenario. thanks....keep reading

Tax Question: I am in the process of buying a property in Spain what would be the pros & cons of getting my fathers uk company buying the property,and then leaving the shares of the company in his will,or even giving me his shares as a gift in time? my father is a Spanish resident of 3 years!...keep reading

Tax Question: A UK resident woman bought a holiday apartment in Tenerife some years ago for 140,000 euros. Current value is probably the same. She has a Spanish Will in which she leaves the apartment to her 2 UK resident sons but has now been told that on her death there will be Spahish Inheritance Tax to pay. Is this correct and if so can you advise how much it may be? Is there anything can be done to avoid/mitigate this? If she gave the apartment to the sons whilst she is still alive would there be any Spanish taxes to pay whether Inheritance Tax or any other?...keep reading

Tax Question: Hi I have a question regarding PPR and CGT. The scenario is a client has owned a property for 16 years. He lived in the property for only 3 of those years and has rented it for the rest. So there is obviously PPR for those 3 years plus the final 3 years. On top of this there is a Private Letting claim. He got married a few years ago and wishes to transfer 50% of the ownership to his wife. He has asked for a potential CGT calculation. This is fine just for him as owner. But what about his wife. If they sell it and they are both owners then the gain will get split between them, but does she qualify for any PPR relief and Private Letting Relief given that she never actually occupied the property only her husband....keep reading

Tax Question: Hi, My wife and I are UK resident and non domiciled and will become UK deemed domiciled for inheritance tax purposes in a few years time. We are considering setting up a discretionary excluded property trust primarily for inheritance tax protection of our foreign assets. However we would like to be able to liquidate the trust if we decide to leave the UK. Three questions: 1] I understand that we could set up a UK resident or a UK non resident trust. What are the relative advantages and disadvantages? 2] Are the assets placed in the trust subject to capital gains tax when setting up the trust ? Can this be avoided by paying the remittance charge and selecting the remittance basis of taxation? 3] If we left the UK we would probably want to liquidate the trust. Does this mean that we or the trust are exposed to capital gains tax? Is this influenced by the choice of a UK resident or non resident trust or by our residence location at the time of liquidation? Bob...keep reading

Tax Question: I am a non resident having left the U. K. some eight years ago. I have recently been offered the opportunity to purchase the freehold of a building consisting of four maisonettes.The premium should be approx. 12k & I am wodering if I will have any tax liability if I were to go through with the transaction.I am Irish & no longer intend to return to the U.K. I would probably purchase the freehold jointly with my partner & I wonder what is the best way forward....keep reading

Tax Question: You have just answered a question from me dated 21.06.12 re purchasing a property in The Philippines in the most effective way to mitigate Uk IHT You state " Ideally you would structure the purchase through a non UK domicillary such as your wife " I,m not married what would my next best option be ?...keep reading

Tax Question: I am a non resident UK citizen.Living in Manila Philippines.Aged 65 divorced. my estate is valued at about £2'300'000 My IHT deductable allowances are £1,500,000 inc. Personal allowance £325000 QROPS £800000 and gifts under 7 years and EIS investments. Etc. leaving me with a IHT amount of £800000 at 40 per cent would leave my estate with a IHT liability of £323000. My main IHT planning was a Family Settlement Trust set up by Vantis plc ..set up in the sum of £285000 the then personal IHT allowance. This was the shares of a company I owned.This was set up when I was UK resident. the intention was after 7 years this sum would fall out of my estate for IHT purpose. it was just recently discovered by my accountants who moved out of Vantis due to them being put into administration..that the scheme had not been registered with HMRC even though the company shares had been transferred to the Family Settlement Trust. My accountants state that I would have been liable to C...keep reading

Tax Question: I was born in the UK and am a British Indian. My father however was born in India [as was his father] and despite living here for more than 17 out of twenty years now, I am under good advice, given his strong links with India he could qualify as non UK-domiciliary for tax purposes. This is especially pertinent as he genuinely visits all the time and may settle back there one day [hence keeping his Indian passport all these years]! We do however have two issues. One is inheritance tax planning. My father having worked hard has built up a small portfolio of investment properties and 2 houses. These are obviously above the combined IHT threshold by a significant amount I should imagine [by at least 500K plus]. He cannot of course gift them to me without triggering a significant CGT on disposal and without planning a significant IHT problem looms. I read with great interest on your site, how using a combination of being non-dom and the double tax treaty with India, could p...keep reading

Tax Question 1: I understand that the inheritance tax threshold of 325k is passed to a spouse on death. Does this mean that when the surviving spouse dies that the threshold of 650k is used for calculating the amount of inheritance tax due? Tax Question 2: Cash and asset gifts are accounted for with regard to Inheritance tax if the person gifting these items dies within 7 years. My question is are there any rules or liabilities for tax other than IHT when gifting cash or assets? Could I give cash away or assets to any individual without any tax liabilty assuming I live for more than 7 years - for either party?...keep reading