Archive | March, 2012

Property-Based Inheritance Tax Avoidance Schemes Are Now Blocked

21 Mar
Inheritance Tax (IHT) rules around excluded property is being amended.
This is to prevent UK domiciled individuals using the rules around excluded property under an offshore trusts to avoid Inheritance Tax while retaining a benefit in the property.
The legislation will amend current IHT excluded property and settled property provisions. The changes are designed to primarily replicate the tax treatment that a UK domiciled individual would suffer if the trust was a UK trust rather than an offshore trust. So, the outcome ensures any potential reduction in the value of a person’s estate as a result of these schemes remains liable to inheritance tax.

These provisions will apply to any new schemes entered on or after 21 March 2012.

The secret to effective IHT planning is to keep the planning conceptually simple, non-contentious and fall within the terms and spirit of the legislation. Where schemes circumvent the rules, it is fair to expect that these schemes are expected to be caught by these changes in legislation. Since the early 1990’s HMRC, Treasury and the Government have been very clear on their outlook. Sometimes, the cost of these schemes and the associated legal battles more than outweigh the tax savings potential.

Always plan carefully

Any questions – my email is


The Ying & Yang of Income Tax Allowances

21 Mar

Hundreds of thousands of basic rate taxpayers will fall into the 40% income tax bracket when the government lowers the threshold next year.

The Budget small print shows the higher rate threshold will be reduced by £1,025, from £42,475 to £41,450, from April next year, capturing, experts suggest, as many as 300,000 extra people.

 The Good News

  • the top rate of tax will be cut to 45% from April 2013
  • the personal allowance will increase to £9,205

The Bad News

  • basic rate threshold will reduce to £32,245


Personal Allowance Increase

21 Mar

From April 2013, the basic personal allowance will increase to £9,205. This is a massive increase of £1,100.

The Chancellor stopped short of announcing any planned increases for 2014, where there are claims that the personal basic allowance may raise to £10,000. This is targeted to be achieved by 2015, as announced in 2011.

VCTs & EISs – Clampdown If Just Targeting Tax Relief

21 Mar

George Osborne confirmed the government will roll out a new disqualifying purpose test to exclude companies set up for the sole purpose of accessing tax relief.

 The purpose of VCTs and EIS’ is to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies, as opposed to taking advantage of the generous tax breaks on offer.

The consultation will come as a blow to some feed-in-tariff VCT and EIS providers. The Government will also introduce a new disqualifying purpose test to exclude companies set up for the purpose of accessing relief, exclude acquisition of shares by a qualifying company in another company, and exclude investment in some Feed-in Tariff businesses.

The good news :-


  • from April 2012 the investment universe for VCTs (Venture Capital Trusts) will be widened. 
  • £1.0 Million investment limit per company rule has been lifted
  • VCTs will have the option to invest larger (actually unrestricted amounts) into a small business


  • EIS tax relief allowance to be doubled to £200,000.


Budget 2012 :- Income Tax Relief Capped

21 Mar

For those who contribute to pensions, the government is introducing a cap on income tax relief for anyone claiming more than £50,000 a year.

For those seeking to claim more than £50,000 of tax reliefs, a cap will be introduced at 25% of income. The plan is to prevent the business activity of setting-up loss making businesses purely to claim tax relief i.e. offset trading losses against trading profits. George Osborne confirmed that the limit will include, amongst others :-

  • Loss reliefs against total income
  • Qualifying loan interest
  • Gift Aid and Charitable gifts of land and shares

The government said it would seek to ensure the cap did not impact on charities that rely on large donations and there would be measures to protect philanthropic giving.

The good news is the chancellor has not cut pensions tax relief.

Comments Attack

21 Mar

Dear all

Please forgive me for deleting your comments.

I am afraid the site had been attacked by many offensive, inappropriate and hideous comments, links and attachments. This has led to the need to wipe all of the connections and comments. It is disgusting how some believe by infiltrating a site, you wouldn’t notice or maybe they think you should accept their smut and vulgarity.

I say no.

Again my apologies for this and site security has been tightened in accordance

All the best



My Expectations from The Budget

21 Mar

This afternoon, the Chancellor George Osborne will deliver his third Budget and I am not expecting many surprises.

Based on the leaks, per-announcements and general rhetoric, I’m expecting the following announcements:

  • Houses worth more than £2m will face a new 7% Stamp Duty Band. This is expected to generate a further £1.5 Billion in additional revenue, which is expected to go to funding a rise in the tax free income tax personal allowance.
  • The top rate of income tax will be reduced to 45% from April 2013.
  • The income tax personal allowance will increase to £9,205 in April 2013 before a further rise by April 2014 (possibly to £10,000). This would be a year earlier than previously suggested.
  • From 2014, income tax payers will be sent a detailed breakdown of the tax they pay and how the Government plans to spend the revenue.
  • The closure of loopholes allowing stamp duty to be avoided. (This was achieved by purchasing the house through an offshore company or by exploiting rules put in place to stop developers paying stamp duty twice.)
  • Changes to pension tax relief is expected. (It is expected either as a reduction in the annual allowance to below the current level of £50,000; or a reduction in the rate of tax relief higher rate tax payers can claim.)
  • It is expected that the Office for Budget Responsibility will announce an increase its forecast for growth in 2012 to 0.8%.

UK Inflation Falls to 3.4%

20 Mar

The inflation figures have fallen again but this seems to be caused primarily by lower utility bills. I would say there are concerns that inflation may creep back up and Corporate Bond & Fixed Interest Contract values do seem to have an increase priced-in.

Consumer Prices Index (CPI) inflation fell to 3.4% and Retail Prices Index (RPI), including mortgage interest payments, fell to 3.7%. (This data has been provided by the Office for National Statistics.)

These figures are still well above the Bank of England’s target for inflation of 2% on the CPI measure.


Average earnings growth stands at 1.4% per annum; and so families will not have noticed much easing on household budgets but rather a further squeeze and the rate of increase in the squeeze has slowed a bit.

The Bank of England is hoping that the rate of inflation will continue to fall over the year and have re-stated that this is their focus. I expect at least short-term that there may be a rise in inflation assuming there is a continuation in the rise in oil prices, the increasing value of Sterling and the fact that fixed interest markets have priced in a further increase; after this as for what follows, I think it is fair to say this is, at best, unclear.

What’s Next?

Chancellor George Osborne will set out his third Budget tomorrow. He has promised to help low and middle earners but it is clear, in the current state of financial affairs, if you give with one hand then you must take away with the other. So, where the cuts and where the payments are applied may have a significant effect, at least for the markets.

To contact me – email; – twitter welshmoneywiz; – linkedin Darren Nathan

Investment Trusts have suffered a Tax Set-Back on VAT

19 Mar

 The debate rages on over investment trust vs open-ended  funds (i,e, Mutual funds, collectives, Unit Trusts, OEICs, UCITS, etc).

Investment Trusts have suffered a setback in a long-running legal battle against HM Revenue & Customs (HMRC) to recover millions of pounds in VAT. PricewaterhouseCoopers, is trying to reclaim VAT paid to HMRC between 1997 and 2001. This follows a victory by the Association of Investment Companies (AIC) in 2007, which stopped VAT being levied on the investment management of trusts. This had the effect of leveling the taxation treatment with open-ended funds.

The High Court earlier this month has ruled that Investment Trusts will be unable to claim back VAT for the period between 1997 and 2001; and in principle could claim back the full amount of VAT for other periods.

Final judgment on this second issue has been adjourned pending the outcome of two decisions in the European Court of Justice and the UK Supreme Court, which will probably take years to be finalised.

Seeking Advice

18 Mar

I have been asked by many, the best way to contact me if you are seeking advice?

The easiest is by the blog email :-, or my business email :- or

Or call my office :- 029 2020 1241

Or my mobile :- 07931 388651

Or to follow me  –

On twitter :- Welshmoneywiz

On Linkedin :- Darren Nathan

All the best