A Corporate Services Provider can provide a myriad of services that can make your business and personal affairs run smoother and forecast when you need to change your thinking.
For instance, last year the Office of Tax Simplification (OTS) was asked by then Chancellor Phillip Hammond review the Inheritance Tax (IHT) rules and procedures. Although these proposals may not make it into law, if they were put into place they would significantly change estate planning and accordingly a Corporate Services Provider’s tax expertise will plot a course through this maze and lead you to the right advice for your situation.
After receiving almost 3,000 responses to an online survey, 500 emails from members of the public and 100 written responses to a call for evidence, the OTS published its first report last November covering the administration of the tax.
It has now followed that up with a second report, which explores the complexities and technical issues that arise from the way the tax works. It makes recommendations which could streamline gift exemptions, change the way the tax works in relation to lifetime gifts to make it both simpler and more intuitive, and address distortions in the operation and scope of reliefs such as those for business property and agricultural property
Here are the main recommendations covering those areas:
Lifetime gifts: There are varying types of gifts that fit this term, including annual, small, wedding and gifts out of income. The report proposes replacing all of these with a single annual allowance.
The seven year rule: At the moment you must survive seven years for larger gifts to be effective for IHT – gifts known as Potentially Exempt Transfers. The report proposes reducing this to five years, this is welcome as people often leave it late in life to gift.
People often hold onto their assets in later life, knowing this will be more tax favourable than gifting during their lifetime and triggering significant CGT costs. The report proposes that when assets pass through the estate the probate value becomes the new ‘base cost’ and gifting or selling the asset may be more tax favourable. This is particularly relevant where assets are passed to a surviving spouse or where assets qualify for Business Property Relief or Agricultural Property Relief.
As stressed at the beginning, all of these are proposals and the report make it clear that implementation of any of them may cause people to change their wills, there should be a generous lead-in time to allow them to absorb the ramifications and make changes accordingly.
Having a Corporate Services Provider staying abreast of potential changes like these means you have someone in your corner who understands the potential consequences of changes like those proposed above and can help you plan for them.