UK INHERITANCE TAX

The spiralling cost of housing and increased wealth in the UK has resulted in Inheritance Tax (IHT) no longer being a concern of the few, but a reality for the majority. Yet many people are unaware that by simple planning this tax burden can be significantly reduced. This report examines a simple tax planning route available to all married couples, explains the taxation of business property, and the rules on life time gifts.

COMPANY SHARE SCHEMES

The most fundamental distinction to be drawn is between “approved” schemes and “unapproved” schemes. The difference between the two is that the government offers tax incentives to approved schemes, which makes them far more desirable for both employer and employee. At the same time, the government has imposed regulations and restrictions to control how these schemes are operated. 

Unapproved schemes do not have official requirements as to how they are operated – the scheme rules can be whatever the employer wants them to be. This freedom is paid for by the absence of tax incentives. The fact that a scheme is “unapproved” does not mean that the Inland Revenue is opposed to its being used, merely that there are no tax breaks on offer for using it!

BUYING A PROPERTY IN SPAIN

It is easy to see why buying a property in Spain has experienced such a boom in recent years. After a short air journey the climate and lifestyle can be experienced first hand.
An estimated 500,000 British citizens already own property in Spain, and this trend is set to increase as more of the baby-boomer generation is set to retire. With today’s more flexible working patterns, more and more people can now consider working, setting up a business or living in Spain.

Unfortunately, when a UK national buys property in Spain, there will inevitably be taxation implications in both countries. The exact issues to be faced will depend on the circumstances and intentions of the individual, and no two situations will ever be exactly the same.

OWNING PROPERTY IN FRANCE – THE LONG-TERM ISSUES

For a UK national buying a second property in France, the immediate tax and legal issues often seem more than enough to contend with. This might explain why many purchasers give little or no thought to the long-term implications of owning property in France – it is tempting to assume that it will be no different from buying a second home in the UK.