Product category:
Protection
News Release from: Standard Life Bank | Subject: Protection
Edited by the Insidemoneytalk Editorial
Team on 11 October 2007
PBR - Standard Life comment from Julie
Hutchison on IHT, CGT and Domicile
Alistair Darling's First Pre-Budget Report (PBR) as Chancellor contained a long-awaited boost for those concerned about the impact of inheritance tax (IHT) on their family.
In a wide-ranging PBR, a number of areas affecting estate planning advice were covered Transferable nil rate band for IHT Pre-Budget Report Note 16 covered these new rules
This article was originally published on Insidemoneytalk on 23 Feb 2007 at 8.00am (UK)
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The focus was on married couples and civil partners to allow them to make full use of their combined nil rate bands.
In today's figures, this means ?600,000 per couple, being twice the ?300,000 nil rate band currently in force.
Julie Hutchison, Estate Planning Specialist at Standard Life Assurance Limited, said "For once I find myself welcoming retrospective tax rules".
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With the start of the new tax year just over one week away, Standard Life is highlighting that those with certain types of trust will have just one year left to consider making changes to them.
Standard Life view on ASP following changes announced in the Budget
In today's budget the Government confirmed major changes to Alternatively Secured Pension (ASP) despite the fact that this facility has been in place for less than one year.
Standard Life: A quiet Budget for Trusts and IHT
Gordon Brown's 11th Budget has generated a lukewarm reaction from those working in the field of estate planning.
"Anyone whose spouse died before 9 October 2007 can benefit from the new transferable IHT rules which could result in a significant IHT saving for the family on second death".
"These new rules address the problem that the nil rate band of the first to die can often be wasted, if assets are simply left to the surviving spouse (since spouse exemption applies)".
"Historically, this prompted the popularity of nil rate band will trusts, and deeds of variation to achieve these where the trust was not in the original will".
"There will now be a re-think on will drafting and whether house titles need to be amended to sever joint tenancies".
"(See note 2)".
"I also welcome the news that the Chancellor will consider house prices when making future increases in the nil rate band." Draft legislation and explanatory notes were published to accompany this Pre-Budget Report Note.
The legislation itself is to be introduced in Finance Act 2008.
Capital gains tax (CGT) As indicated in Pre-Budget Report Note 17, there is a wide-ranging reform of CGT which will take effect from 6 April 2008.
Until now, there have been various rates of tax which could apply and a number of component parts to the CGT calculation, which could involve indexation and two differing rates of taper relief depending on whether or not the asset qualified as a business asset.
Commenting on the proposed changes, Julie Hutchison, Estate Planning Specialist at Standard Life Assurance Limited said "I welcome the radical simplification of CGT rules".
"However, those with business assets who have built-up two years of taper relief will no doubt be considering their position prior to 6th April 2008 since disposals before that date could be taxed at 10% rather than 18% which will apply after 6th April 2008".
"On the other hand, as someone involved in teaching tax, I imagine the students will understand CGT better as a result of these changes." Domicile Pre-Budget Report Note 18 dealt with proposed changes which will come into effect on 6th April 2008.
A further period of consultation will take place with draft legislation to be published towards the end of the year.
In summary, an annual levy of £30,000 is proposed in circumstances where a non-domiciled person has been resident for at least 7 years.
Commenting on the proposals, Julie Hutchison, Estate Planning Specialist at Standard Life Assurance Limited said "Domicile has been on the table for discussion since the review announced in Budget 2002, followed by a Treasury Background Paper in April 2003".
"Since that time, it has been dormant in terms of reform, but in 2007 came alive again with the focus in the Treasury Select Committee's Tenth Report on private equity, which published its report in July".
"We live in an increasingly mobile society".
"Leaving to one side the example of London's financial community, you only need to look at the world of football to see the range of international figures attracted to come and work in this country, either as a player or manager".
"It will be good to end the period of uncertainty which has existed over the last few years and bring this review to a close".
"We await the publication of the detailed proposals with interest".
"The levy could affect the decisions people make about their period of residency in the UK." Media enquiries please contact: Yvonne Savage, PR Manager Standard Life Assurance Limited Direct: 0131 245 0476 Mobile: 0771 248 6331 Email: yvonne_savage@standardlife.com.
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