Month: March 2018

icon-feather-calendar 22nd March 2018

Ken Dodd: A shrewd tax planner?

The death of beloved comedian, Ken Dodd, last week has shone a light on the Inheritance Tax rules and the importance of planning your estate correctly.

The late comedian married his long-term partner of over 40 years just two days before his death and it is thought he did this to ensure the tax man cannot claim over £2 million in Inheritance Tax from his approximate £7 million estate.

Tax advantages of being married

A person’s marital status can make an enormous difference when it comes to the Inheritance Tax bill of their estate. The current Inheritance Tax threshold (the ‘nil rate band’) is £325,000 (and may be up to £425,000 for certain homeowners). Assets pass between married couples on death completely free of any Inheritance Tax, regardless of the size of their estate.

Moreover, where married couples leave their estates to each other on death their nil rate band is preserved and can be transferred and utilised on the second death. This gives married couples a tax-free allowance of currently up to £850,000.

IHT problems for unmarried couples

For unmarried couples, however, only an amount up to the nil rate band can be passed to the survivor free of tax. The excess is then taxed at 40%.  This could result in unfortunate consequences, such as the survivor having to sell their property to pay the tax bill.

There is also no transferable nil rate band between unmarried couples.

Conclusion

Marital status is not necessarily enough to ensure the Inheritance Tax saving can be made, however. It is also important to plan your estate in advance and a crucial part of this is to have a Will in place so that you can ensure your assets pass to your chosen beneficiaries, and in a tax-efficient way. This could save your loved ones thousands of pounds in tax and provide reassurance at a difficult and emotional time.

If you would like further advice  or guidance on estate planning or Will-writing then please do not hesitate to contact us on info@vyman.co.uk or 0208 427 9080.

icon-feather-calendar 1st March 2018

Claims against Company Directors

As advisers to many companies and company directors and shareholders, the Vyman team thought you would be interested in the following Supreme Court case.

Burnden Holdings (UK) Ltd v Fielding (28 February 2018)

In short, the directors of the company had made a significant distribution to themselves as shareholders. Subsequently, the company went into liquidation and the liquidator made a claim against the directors claiming that the transactions constituted an unlawful distribution (because the company never had sufficient distributable profits).

The claim was commenced more than 6 years after the distribution and so the directors argued that the claim was statute barred. However, the Supreme Court disagreed and stated that the assets which were distributed were trust assets and therefore the limitation period relating to trusts should apply. Generally, there is no limitation period which prevents the recovery of trust assets.

Comment

The notable point about this case is that the Supreme Court now regards property and funds belonging to a company as trust property. If the directors deal with such property or assets wrongly, a claim can be pursued long after the events in question and no limitation period will apply.

The onus is therefore on advisers to make sure that any transactions involving directors and shareholders are lawful and properly authorised.

If you require any further information or guidance in relation to these sort of issues, please do not hesitate to contact us at info@vyman.co.uk or 0208 427 9080.