Mark McLaughlin looks at the pre-owned assets tax charge, and its connection with inheritance tax planning. Planning to mitigate a particular tax can sometimes have an unforeseen knock-on effect for other taxes. A Nasty Surprise? For example, ‘pre-owned assets tax’ (POAT) is an income tax charge, which was introduced to block certain ‘unacceptable’ inheritance tax […]
Goodbye IHT…Hello Income Tax? Read More »
Trusts are formed when the legal ownership of an asset is separated from the beneficial ownership, i.e., a legal owner (the trustee) holds it ‘on trust’ for another person (the beneficiary) who benefits from it. The person who establishes the trust is the ‘settlor’. These trusts are known as ‘express trusts’, i.e., those deliberately created
Trusts: The Basics Read More »
A question often asked is: “Can I give all my assets to my children and avoid inheritance tax (IHT)?”. The short answer is yes, but to avoid the tax, you need to live seven years from the gift and cannot benefit from the asset after the gift. If you continue to ‘enjoy’ the gifted assets,
Friends Without Benefits! Read More »
Many individuals without much knowledge of inheritance tax (IHT) will nevertheless be aware of a ‘seven-year rule’ for escaping IHT on lifetime gifts. The Seven-Year Rule In broad terms, the ‘seven-year rule’ is shorthand for the general principle that if (for example) a parent gifts an asset to their adult child, the gift is a
Trusts are often mis-trusted (excuse the pun!); they are seen as being vehicles of fraud, dodgy dealings and generally something to be avoided. Whilst they could indeed be used for such ends (just as limited companies and any other structure might), trusts are more often used as a perfectly innocuous means of holding assets for
Can You Put Your Trust in Trusts? Read More »
For many years, unlike normal rented properties, the rent from a furnished holiday letting (FHL) was treated as trading rather than investment income, which had several tax benefits. Broadly, a property could be treated as an FHL if, in each tax year, it was available for short-term letting for 210 days and was in fact,
All Change: Furnished Holiday Lettings Read More »
The inheritance tax (IHT) annual exemption is often overlooked. This is probably because the exempt amount is a relatively modest £3,000 (for 2025/26). However, as the well-known slogan from the popular supermarket goes, ‘every little helps’! For example, £3,000 given away in every tax year for seven years can shelter £21,000 from a possible IHT
Use It or Lose It! Read More »
Those of a certain vintage will remember ‘Auf Wiedersehen, Pet’, a comedy series from the 1980s. Of course, a PET (potentially exempt transfer) in an inheritance tax (IHT) context has a different meaning. However, the comedy title has a certain relevance in one sense – individuals who make lifetime gifts can say ‘goodbye’ to a
Auf Wiedersehen, PET! Read More »
The changes to agricultural property relief (APR) and business property relief (BPR) announced in the Autumn Budget 2024 by Rachel Reeves mean that, for the first time in over thirty years, some farms and other trading businesses will potentially come within the inheritance tax (IHT) net from 6 April 2026. The details of the plans
Potentially A Lot of Interest in Instalments! Read More »
Everyone is entitled to an inheritance tax (IHT) ‘nil-rate band’ of up to £325,000 (for 2025/26) on death, reduced by any gifts which are not exempt within seven years before death. That’s Not All… In addition, unused nil-rate band of a deceased spouse (or civil partner) is generally available to be transferred to the surviving
IHT-Free: £325,000 or £1m? Read More »
