|Welcome to The Informed Investor. Press Control+B to Bookmark this site for later reference.|
||NOTICE: In regards to the Direction by The
of The Exchequer, Hovis, all tax avoidance plans are being operated by
off-shore company and are created in consultation with the clients as
- off plans for that client only. Most of the plans listed below are
defunct but give an idea on the type of plans we have been writing
1966. Drummond & Co will be pleased to introduce those interested
Tax Mitigation to the off-shore company, who are under no obligation to
For the information of the Inland Revenue you can read up on all the plans we utilise by reading the Statutes of England and Wales. They are all in there.
As part of
Drummond & Co's
" Nothing is more certain than death and taxes" - Benjamin Franklin
Mr Franklin may well have been right but the certainty that one leads to the others has been challenged for many years. Not only that but the accepted natural consequences that investment profits and gains, especially those generated by our own efforts, fall to be taxed is continuously scrutinised by the legal and accounting professions. With significant success.
The legitimate reduction or elimination of taxes and duties which become payable on crystallising gains or death has been a professional preoccupation for many years.
view is that such revenues are unfair because the wealth has been
by sheer hard work, and that the tax has previously been paid on the
capital or assets.
on legal, taxation and non FSA advice
It enables them, at rates which have been accepted by the Inland Revenue, to:
The Capital Redemption Policy is straightforward to establish. The range of acceptable assets to invest in, including private shares, land and property, and to retain is exceptionally wide. The benefits are proven.
A Capital Redemption Policy is a capital redemption contract
in exchange for the payment of a premium. The premium may be cash, an
share, unit trust or bond portfolio, unlisted securities such a private
company shares or other property.
In transferring the premium to the Endowment Company and receiving a Capital Redemption Policy in return you are in fact substituting a new, single asset for your current assets. The existing block of assets has created current or potential tax liabilities leading to income tax on interest dividends or other income arising; capital gains tax on growth in value of certain of the assets and possible inheritance tax liabilities when you eventually die and leave your estate to beneficiaries.
The new asset you
in return is completely different. It is a policy issued by an
Company which is linked in value to a Special Account. For example,
the value you have transferred is now within a CAPITAL REDEMPTION
which cannot be accessed during the term of each policy, the value of
policy is discounted at a rate which has been previously accepted by,
agreed with the UK revenue. Just as the redemption value of certain
, Government gilt-edged securities trade at well below their par value,
so the current discounted value of your capital redemption policy is
well below the value of the assets identified with the linked fund.
This discount basis will substantially reduce the Inheritance Tax
liability on your death. The basis of discounting and the fact that
policies of capital redemption are subject to Capital Gains Tax
additionally means that CAPITAL GAINS TAX on the transfer can also be
form part of the Assurance Company's long term funds and thus the
taxation treatment of the Endowment Company is " wrapped around" your
This tax treatment currently means no liability to corporation
on income and gains arising within the funds. Your fund essentially can
in value on a tax free basis.
An example may help
explain the attributes of the Capital Redemption Policy. Mrs.
is a widow aged 65. Her husband died two years ago and left his entire
estate to her. Her assets are now worth £1 million and comprise
of her home valued at £195,000, a savings account with a Building
Society worth £55,000, an investment portfolio recently valued at
shares in her late husbands business valued at £500,000. The gain
the investment portfolio and private shares is £600,000.
The Lawyer concerned is in possession of legal opinion on this scheme but will only show it to prospective clients and will not allow copies for distribution.
24 hour Hotline Tel:
13 Nottingham Place, London, W1U 5LE
Fax : +44(0) 845 862 1954
If you are seeking a Non Status on-line account we recommend you apply for a PayBox.me Account. You get $50 for joining and up to $20 a day added during launch. You can also earn by recruiting others.
|If you have a Tapaz ID you can request more
on Capital Redemption Policies, by entering your ID and pressing Tapaz.
The rate of taper relief is different for business and non-business assets. As non-business asset taper relief is ineffective for ownership periods of less than 3 years, and as some asset disposals are identified on a last in first out basis, you may consider investing through a collective investment scheme or an investment trust.
Where assets have been received by way of a gift and subjected to holdover relief then the ownership period commences from the date of the transfer. Any accrued taper relief is lost. The timing of any disposal, the person making the taxable disposal and the period of ownership will have an effect on any potential tax liability. As the effect of full business taper relief is to reduce the effective tax rate down to 25% of the nominal rate ( i.e. to as little as 10% for a higher rate taxpayer), it is an extremely valuable relief.
There are to be changes in the budget that will result in full taper being available after 5 years. However it is not known whether the enhanced relief will apply to all business assets or only to those acquired after a set date. Non business taper is expected to continue to be available over 10 years, giving a maximum reduction of 40% i.e. an effective maximum rate of 24%.
Annual exemption/tax rate
Each individual is entitled to an exemption from tax on chargeable gains of up to £7100. Assets held in a bare trust for a child are treated as belonging to the child and the child's annual exemption and basic rate band is available in taxing any gain arising on a sale. The ability to use the child's personal allowance for income tax with a bare trust was removed last year.
Gains in excess of £7100 are liable to tax at 20% or, for higher taxpayers, 40%. You may consider crystallising a gain to use the annual exemption, or a loss in order to use the relief, by selling and buying back the asset.
There are, however, complicated rules that govern the identification of sales and acquisitions of stocks and shares which need to be taken into account. Trusts are entitled to a lower tax exemption ( generally £3550) and most are liable to tax at 34%. It may be possible to use holdover relief for gifts to individuals and trusts in order to realise a gain at a lower rate of tax. Clearly taper relief may be extremely valuable and care is needed to ensure that the ownership period is not effectively reduced.
Hold - over Relief
For assets generally, it is necessary to subscribe for shares in a qualifying company or a venture capital trust ( subject to certain monetary limits). In addition to providing for deferral of the capital gains tax charge, at up to 40%, there may also be an income tax reduction of 20% where the company qualified under the Enterprise Investment Scheme or as a Venture Capital Trust. Gains arising on gifts of business assets to individuals, or on the transfer of any asset into a discretionary trust, can also be held over. In the November pre-Budget report it was announced that it is no longer possible to holdover a gain on certain gifts into a company. Gifts to charities are free of capital gains tax. From April 2000 you should be able to make a gift of quoted shares to a charity, avoid any capital gains tax and get income tax relief on the gift.
often favoured a tax on death and on capital transfers. Whilst
relatively little tax, it looks increasingly likely that inheritance
not be strengthened until after the next election.
There are, however, features that may be curtailed. In last year's Finance Act, the ability to gift an interest in a residence, whilst continuing to live in it, was severely restricted.
It is important to note that the basis of valuation for IHT is the "loss to the donor" rule i.e. how much worse off the donor is, not how much better off is the donee. It is also important to note that property owned by the husband and wife may be related for valuation purposes.
Although transfers between UK domiciled couples are exempt, husband and wife are regarded as separate persons and have their own reliefs and exemptions. In appropriate circumstances the reliefs may be doubled up by husband/wife transfers followed by a gift to the intended beneficiary.
Exemptions and Reliefs
A very useful relief, for those with surplus income, is that for normal expenditure out of income. The gift should leave the donor, over a period of time, with sufficient to maintain their normal lifestyle. However, a pattern of behaviour needs to be established in order that the expenditure can be regarded as normal. For substantial, ad hoc gifts, the potentially exempt transfer (PET), which becomes exempt provided the donor survive 7 years is considered to be very generous as there is no monetary limit and the gift can be into certain trusts. Last year, a requirement was imposed on executors to report the value of gifts made in the 7 years prior to death.
Monetary limits may
introduced in relation to PET's and the survival period could be
For smaller gifts the annual exemption of £3000 ( which may be
forward one year) should be used regularly.
labour spokesman has said that the nil rate band ( currently
is considered to be reasonable in the context of the current rate
A lower limit may, however, be introduced together with a lower tax
for modest transfers. The nil rate band is particularly useful in the
of transfers into discretionary trusts, especially as capital gains tax
relief may also be available. This relief could well be removed.
The 100% reduction in value for the transfer of some business and agricultural property has often been suggested as being extremely generous, especially as there is no capital gains tax on assets owned at death. One or other could be restricted.
Whilst it is, at present, possible to vary the way an estate is distributed, it may not be practical to do so. All parties affected must agree to do so within two years of the date of the death. Where infant children or charities are beneficiaries, the problems multiply. Further, the ability to vary a will has been challenged in parliament in the past and the tax efficiency of doing so may be curtailed in the future. The most sensible course of action is for taxpayers to ensure that they will have a will and to continually review their circumstances and the consequences of leaving a will unamended.
List of Interesting UK Sites
It's well worth the money
This site is Netword enabled.
This site's Netword is
(CAPITAL REDEMPTION PLANS).
Tell your friends.
|Alta Vista||Alta vista is a
engine, reinvented as a Web portal.
By incorporating regular news services, email and shopping they
have increased their functionality and stickiness ten fold.http://www.altavista.digital.com/
|Apollo (web advertising Catalogue)UK||http://apollo.co.uk|
|Ask Jeeves||Ask Jeeves is a
generation engine. Instead of searching based on keywords, it attempts
answer your questions.
|BizAds Business Locator||http://bizads.2cowherd.net/|
|Business Online is a very powerful business tool which contains news, directories, classifieds, articles, databases, international buyer-seller connections and BizWiz||http://www.clickit.com|
|City Pages (UK)||http://www.citypages.co.uk|
|Fast Search||The largest spider is Fast Search which indexes around 200 million web pages. It is very speedy.http://www.alltheweb.com|
|Directoryfind is the UK financial services industry net directory.||It is an
site which links directly to over 3000 UK financial services
|A novel approach-
looks at the results of other search engines and takes notes of the
links people have followed.
|Hotbot||Hotbot is a spider
offers some particularly nice search tools. By playing with the options
available at the left hand side of the main page you can be very
specific about the sort of results you want.
|Humor Search Comedy Search Engine||http://www.humorsearch.com/|
|Mamma||Mama is a
it runs your keyword through a number of spiders and collates the
|Microsoft MSN||Is this a monopoly?|
|Money-Search||Geared to small
businesses & investment
|Nerd World Media||http://www.nerdworld.com|
|PedagoNet- Geared to teaching and learning sites||http://www.pedagonet.com/|
|Savvy-Search (multiple search engines)||http://rampal.cs.colostate.edu:2000/|
|Shopping UK Oh dear they won't list us !||http://www.shoppinguk.co.uk|
|Softsearch- Geared to finding software programmes||http://www.softsearch.com|
|Starting Point||ClickHEREto vote for this page as a Starting Point Hot
|UK Taxation Directory||http://www.uktax.demon.co.uk/|
|Webseer- Searches for online pictures||http://webseer.cs.uchicago.edu/|
|What's New Too!||http://newtoo.manifest.com/search.html|
|WWWomen- Womens issues||http://www.wwwomen.com/|
|WWWW (The World Wide WebbWorm)||http://www.goto.com/|
with access to the www has used Yahoo for
some reason or another. Initially a search engine, Yahoo is a now a
gateway for online shopping, news, email and a whole load more.http://www.yahoo.com