ADVANCED TAX PLANNING

Tax Efficient Awards

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Whether it is rewarding and motivating directors, partners, consultants, or even key investors, Our Tax Specialists are able to advise on a unique array of tax efficient structures which seek to motivate key people in and around a business.  Additionally, with the high rates of income tax continuing to exist in such challenging market conditions, the need for tax efficiency in this area will arguably never be greater.

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Outline

  • Your Company can incentivise particular people/individuals based on their performance

  • This can be done in a way to allow for benefits for wider groups, if required

Benefits

  • Corporation tax relief and income tax /deferral on sums where appropriate

  • Tax efficient compared to typical PAYE/dividend/pension routs

  • No annual benefit in kind

  • Can possibly apply to some bonus provisions

  • Greater reward/incentive for the individual

  • Funds may be protected from liquidation and bankruptcy

  • Significant Inheritance Tax opportunities

  • Arrangements can be made within the UK, or offshore depending on circumstances

  • Can be structured to fulfil clients longer term objectives

Who is this suitable for

  • Companies who wish to incentivise key individuals, both long and short term

  • Profitable companies generally, but also..

  • Profitable companies with limited cash

  • Can apply to employees and directors(including those who are shareholders)

  • Can apply to suitable provisions made in prior year

Risks

  • Income tax deferral-Depending on how the planning is structured and what the needs of the individuals are in the future, income tax may be payable at some stage.

  • Retrospective and prospective tax legislation- Not possible to predict and should always be considered.

  • Administration costs-This may include future transaction costs where applicable, and compliance costs (if any) depending on longer term objectives.

Inheritance Tax

  • Inheritance tax can cost loved ones hundreds of thousands in the event of your death, yet it's possible to legally avoid huge swathes of it, or possibly pay none at all.

What is Inheritance Tax

  • Inheritance tax is the tax paid on assets (after inheritance tax allowances are deducted) left when someone dies.

  • As Benjamin Franklin said, the only things certain in life are death and taxes, and inheritance tax (IHT) touches on both.

  • The BIG question... how much tax do you pay?

  • Your estate will owe tax at 40% on anything above the £325,000 inheritance tax threshold when you die (or 36% if you leave at least 10% to a charity).

  • Dealing with it is one of the biggest single money saving things you can do, as some simple actions can save you £100,000s. Yet sadly many people ignore it, either not wanting to consider the future or simply unable to broach it with relatives for fear of seeming grasping

  • The current allowance whereby no inheritance tax is charged is on the first £325,000 (per person) of someone's estate – which is the value of their total assets they leave behind when they die. Couples can leave a home worth £650,000 without it attracting inheritance tax (singles £325,000). Above the threshold, the charge is 40%. This remains unchanged. What has changed is the introduction of a new 'main residence' band.

New for the 2017/18 tax year was the additional 'main residence' allowance. It is only valid on a main residence and where the recipient of a home is a direct descendant (classed as children, step-children and grandchildren). This is gradually being phased in as follows and is what you'll get on top of your existing allowance:

  • For this tax year it's starting at £100,000 (meaning a total allowance of £425,000), rising by £25,000 each year till it reaches £175,000 (meaning a total allowance of £500,000) in 2020.

  • So now the maximum that can be passed on tax-free is £850,000 for married couples or those in a civil partnership, £425,000 for others. For singles, this is made up of the existing £325,000, plus the extra £100,000. For couples, when the first one dies their allowance is passed to the survivor, so that £425,000 is doubled to £850,000.

  • In 2020, the tax-free amount will rise to £1 million for couples (made up of £325,000 x 2 plus £175,000 x 2) and £500,000 for singles (made up of £325,000 plus £175,000), as the main residence allowance rises.

  • On properties worth between £1 million and £2 million, inheritance tax will be paid as normal on the amount above the tax-free amount.

  • On properties worth £2 million or more, homeowners will lose £1 of the 'main residence' allowance for every £2 of value above £2 million. So for a couple, properties worth £2,350,000 or more will get no additional allowance.

  • Inheritance tax is clearly a huge area of saving money. After all, you don't want to be super-savvy all your life just to have most of what you've saved go to the taxman


What is the Key to mitigating the tax payable?

  • The key to ensuring that your loved ones inherit your estate as a whole, or it passes to whomsoever you wish, is to make early plans ………

  • Contact us for details on how we can help.

  • Inheritance tax planning is important, but don't forget, the main thing is that you (or your parents) should have financial security in old age. Don't sacrifice everything just to plan for someone else's future. You've earned your money, so let it make you comfortable.

  • We do not charge for an initial consultation.

Benefits of our service

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​Crucially, we do not require any upfront fees.

 

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©2019 by Alfay Tax Solutions (UK) Ltd.