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Vol 24 No 9 Sept/Oct 2019

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Tax Advisers' Guide to Trusts 6th ed


ISBN13: 9781526511799
Previous Edition ISBN: 9781780436081
To be Published: January 2020
Publisher: Bloomsbury Professional
Country of Publication: UK
Format: Paperback
Price: £150.00



Demystifies the subject of tax and explains the tax rules and the way in which trusts can be used in practice as a flexible and effective means of wealth accumulation and protection.

This book concentrates on the UK tax rules applicable to trusts, resident in the UK, or abroad, and the resultant tax liabilities of the trustees, settlors and beneficiaries, and opportunities for reducing those liabilities where possible.

Since the last edition was published in early 2016 (reflecting F (No. 2) A 2015), there has been significant legislative change reflected in several Finance Acts, in relation to the following areas:

1. Administration/Enforcement/Reporting

  • Introduction of the new penalty regime for offshore assets, with a higher level of penalties depending upon various factors, including territory
  • New enforcement powers for HMRC
  • Revisions to the Disclosure of Tax Avoidance Scheme (DOTAS) rules, especially regarding employee trusts
  • The extension of time limit for assessment in relation to offshore matters, which has implications for offshore tax advisers, settlors and beneficiaries
  • Introduction of the serial tax avoiders' regime (STAR), which enables HMRC to levy penalties, 'name and shame' taxpayers and require information to be submitted on defeated avoidance arrangements
  • New corporate criminal offence of failing to prevent tax evasion
  • New penalty regime for enablers of defeated tax avoidance schemes
  • Trust Registration Services have been introduced by HMRC for registering new/existing trusts under anti-money laundering regulations
  • Common Reporting Standard and reporting obligations
  • Devolution of taxes to Scottish/Welsh national assemblies.
      2. Capital gains tax
      • 'Real time' CGT reporting is optional at present, but from 6 April 2020 it will become obligatory to report disposals of UK residential property to HMRC within 30 days of disposal, and pay any tax due
      • Under the non-resident CGT (NRCGT) rules, a person resident abroad who makes a disposal of UK residential property must make a return to HMRC within 30 days and pay any CGT due. Different timelines apply if the person is within the NRL scheme; evidence suggests that these rules are still not well understood amongst the tax profession.
      • Changes to the Entrepreneur's Relief rules in Finance Act 2019, in particular concerning the qualifying ownership period and the definition of 'personal company'
      • From 6 April 2017, individuals who have been resident in the UK for 15 out of the previous 20 years will be deemed to be UK domiciled for income tax, capital gains tax and IHT purposes.
      • Introduction of employee ownership trusts / various reliefs.
      3. Income tax
      • The abolition of requirement for banks etc to deduct basic rate income tax from payments of interest from 6 April 2016, meaning that trustees in receipt of bank interest no longer have taxable credit to offset tax liability
      • The abolition of dividend tax credit from 6 April 2016
      • The restriction on deductible interest from residential property rentals
      • From 6 April 2017, individuals who have been resident in the UK for 15 out of the previous 20 years will be deemed to be UK domiciled for income tax, capital gains tax and IHT purposes and implications for settlement protections
      • The proposed move to corporation tax rules for non-resident landlords from April 2020
      • Amendments to disguised remuneration rules and the Rangers FC case re EBTs and payments of earnings, particularly relevant to trustees of employee trusts.
      4. Inheritance tax
      • The introduction of the residence nil rate band (RNRB), which is designed to allow a married couple to pass on a family home worth up to £1m to (broadly) descendants without falling within scope of IHT, including complex provisions dealing with 'downsizing'
      • Residential property situated in the UK is no longer capable of representing 'excluded property' from 6 April 2017
      • Change to the definition of 'deemed domicile' for IHT.
      • Barclays Wealth case/prospective amendment of the rule for additions, which affects excluded property trust status and especially the treatment of inter-trust transfers
      • The introduction of various exemptions for specific items, eg decorations and awards, certain medical personnel, etc
      5. Other
      • Various indirect tax changes that may affect trustees, eg increased SDLT rates etc
      • Numerous changes made to the rules relating to pension administration.
      The new edition also covers some significant cases which have emerged since the last edition including:
      • The Rangers Football Club Plc v Advocate General for Scotland [2017] UKSC 45, re EBTs and payments of earnings, particularly relevant to trustees of employee trusts.

      • Barclays Wealth Trustees (Jersey) Ltd & Anor v HMRC [2017] EWCA Civ 1512, re excluded property trust status and the treatment of inter-trust transfers

Subjects:
Equity and Trusts, Taxation
Contents:
Preface
Table of statutes
Table of statutory instruments
Table of cases
Abbreviations and references
Chapter 1: A Useful Relationship
Chapter 2: Main Trust Legislation
Chapter 3: Trust Formalities
Chapter 4: Powers and Duties of Trustees
Chapter 5: Residence and Domicile
Chapter 6: Main Taxation Rules Applicable to Trusts
Chapter 7: Relevant Property Trusts
Chapter 8: Bare Trusts and Interest in Possession Trusts
Chapter 9: Trusts for Children and Young Adults
Chapter 10: Foreign Trusts
Chapter 11: Charitable Trusts
Chapter 12: Purpose and Heritage Trusts and Foundations
Chapter 13: Protective and Vulnerable Person Trusts
Chapter 14: Asset Protection Trusts
Chapter 15: Wills, Trusts and Statutory Trusts
Chapter 16: Employee Trusts
Chapter 17: Trusts of Land
Chapter 18: Pension Funds
Chapter 19: Trust Tax Returns
Appendix 1: Legislation
Wills Act 1837
Apportionment Act 1870
Settled Land Act 1925
Trustee Act 1925
Law of Property Act 1925
Administration of Estates Act 1925
Intestates' Estates Act 1952
Variation of Trusts Act 1958
Trustee Investments Act 1961
Perpetuities and Accumulations Act 1964
Powers of Attorney Act 1971
Domicile and Matrimonial Proceedings Act 1973
Inheritance (Provision for Family and Dependants) Act 1975
Enduring Powers of Attorney Act 1985
Recognition of Trusts Act 1987
Law of Property (Miscellaneous Provisions) Act 1994
Trusts of Land and Appointment of Trustees Act 1996
Trustee Delegation Act 1999
Trustee Act 2000
Proceeds of Crime Act 2002
Mental Capacity Act 2005
Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007
Perpetuities and Accumulations Act 2009
Charities Act 2011
Trusts (Capital and Income) Act 2013
Children and Families Act 2014
Market Value of Shares, Securities and Strips Regulations 2015
Appendix 2: Draft Legislation
Charities (Protection and Social Investment) Bill
Appendix 3: Capital Gains Tax - Indexation Allowance for
Individuals and Trusts
Appendix 4: Inheritance Tax Bands
Appendix 5: Period Expectation of Life (simplified)
Appendix 6: Income Tax and Capital Gains Tax for Non-resident Trusts
Appendix 7: Standard Provisions of the Society of Trust and Estate Practitioners: 1st Edition and 2nd Edition
Appendix 8: HMRC Trusts and Estates Toolkit
Appendix 9: Convention on the Law Applicable to Trusts
and on their Recognition
Index