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Marriage breakdown
Maintenance payments do not usually qualify for tax relief. The
special CGT and IHT treatment for transfers between spouses
applies throughout the tax year in which a separation occurs.
For CGT, transfers in subsequent years are dealt with under
the rules for disposals between connected persons, with the
disposal treated as a sale at market value, which could result in
substantial chargeable gains. For IHT, transfers remain exempt
until the decree absolute.
Careful consideration as to the timing of such transfers is
essential. We can provide advice and assistance in this matter.
Planning for the worst
Proper contingency planning can help to ensure that your
spouse and/or children would be able to cope financially if you
died or were incapacitated.
One initial step might be to take out adequate insurance cover,
perhaps with life assurance written into trust for your spouse
or children to ensure quick access to funds. However, it is also
important to make a Will. We also strongly recommend that you
and your spouse:
•
Make a living Will (also called ‘advance decisions’):
so
that your wishes are clear with regard to medical treatment
in the event that, for example, you were seriously injured
following an accident
•
Execute a lasting power of attorney:
so that if you
become incapacitated and unable to manage your affairs,
whether as a result of an accident or illness, responsibility
will pass to a trusted person of your choosing.
On a practical note, make sure that you tell your spouse, your
parents, and your business partners where your Will and any
related documents are kept. It is your choice whether to discuss
your affairs in detail, but if you are passing on responsibility
for managing your affairs, it might be advisable to talk matters
through with them.
Checking for unclaimed assets
Billions of pounds worth of assets lie unclaimed in the UK. To
see if you have any lost assets contact the Unclaimed Assets
Register on 0844 481 8180 or visit
www.uar.co.uk.Please note
that a charge applies for this service. To find out whether you
have an unclaimed Premium Bond prize, call
0500 007 007
or
visit
www.nsandi.com.
Non UK domiciles: the current position
A UK resident and domiciled individual is taxed on worldwide
income and gains. Non UK domiciles who are UK resident
are currently able to claim the remittance basis of taxation in
respect of foreign income and gains. This means that they are
only taxed if foreign income and gains are brought into the
UK. The non UK domicile is also favourably treated for IHT as
they only pay IHT in respect of UK assets as opposed to their
worldwide assets.
New proposals for non UK domiciles
The Government intends to abolish non UK domicile status for
certain long term residents from April 2017. This will only apply
where an individual has been resident for at least 15 out of the
last 20 tax years. Such individuals will be treated as deemed UK
domiciled for all tax purposes.
In addition, those who had a domicile in the UK at the date of
their birth will revert to having a UK domicile for tax purposes
whenever they are resident in the UK, even if under general law
they have acquired a domicile in another country.
Checklist: Financial protection strategies
Self
✔
Spouse
✔
Essential:
Will
Living Will
Lasting power of attorney
Life assurance
Keep papers in a safe place – and make
sure other people know where they are!
Seriously consider:
Income, mortgage and loan protection
insurance
Tax-efficient estate planning
Planning for the transfer of your business
Funeral arrangements and expenses
A tax-efficient gift strategy
Next steps: contact us to discuss…
• Making the most of allowances and reliefs
• Ensuring that your tax liability is kept to a minimum
within the law
• Using savings, capital and other vehicles to give your
children a better start in life
• Writing a Will
• Life insurance and obtaining disability and critical
illness insurance
• Tax-efficient savings and investments