12 - Tax Planning

Question 1

Effect of tax planning on recommendation

Answer 1

Must be used as a consideration but to no detriment and along side other factors

Question 2

Disclosure of tax avoidance scheme

Answer 2

Tax avoidance schemes must be registered with HMRC but does not mean approval from HMRC

Question 3

General anti abuse rule is what?

Answer 3

Last resort for tax avoidance

Question 4

What 4 questions must be answers yes for general anti abuse rule to be applicable?

Answer 4

Does it give a tax advantage?

Does it relate to where GAAR applies?

Is a tax advantage one of the main purposes of the arrangement?

Is the arrangement abusive?

Question 5

Who provides an independent review of case for GAAR?

Answer 5

GAAR advisory panel

Question 6

How to reduce impact of tax on savings income for a married couple?

Answer 6

Has a joint savings account splitting savings income to half each

Question 7

Can a salary for a relative be set at anything?

Answer 7

No must reflect work done

Question 8

Help to save account what is it and what is the criteria?

Answer 8

Savings account for those on a low income

• must be receiving benefits
• max. £50pm
• 50% tax free bonus
• can withdraw after 2yrs or keep account for 4yrs max

Question 9

How long to receive max. pension when paying NIC’s?

Answer 9

35yrs

Question 10

What is benefit for employer paying pension contributions for an employee?

Answer 10

Deductible for corporation tax

Question 11

Is pension income after lump sum taxable?

Answer 11

Yes

Question 12

What is a deed of variation on a will? How long before can no longer be enacted?

Answer 12

Amend the result of a will to be more tax efficient

Have 2yrs after death to enact

Question 13

Although transferring assets to spouse has become less relevant as can transfer NRB, what is the 2 main benefits of IHT on first death?

Answer 13

• Beneficial is asset will grow in excess of growth of NRB
• If there is a second marriage it is unreasonable to expect dependent of a different family to benefit

Question 14

2 drawbacks benefit of recipient of estate on death being non-UK dom. and UK dom.

Answer 14

Non UK:
- no IHT on overseas assets
- Benefit from lifetime transfers

UK:
- pay UK tax on all assets world wide
- Can volunteer for UK dom. tax but is irrevocable

Question 15

IHT exemptions for both UK dom. and non-UK dom.

Answer 15

£3k gift allowance per individual

Small gift of £250 max.

Gifts out of normal expenditure that do not effect standard of living e.g. cover a life policy or pension contributions, etc.

Question 16

Does a cross option remove the business relief would receive?

Answer 16

No as not a binding contract of sale

Question 17

Does a buy and sell share remove the business relief would receive?

Answer 17

Yes as a binding contract of sale

Question 18

Purpose of a gift inter vivos policy

Answer 18

Policy to cover IHT liability