28 December 2012 by

The Draft Finance Bill 2013 – what does it mean for me?

Now that Christmas is over for another year, thoughts are turning to 2013.

Earlier this month, following the Autumn Statement, HM Treasury and HMRC published draft legislation for the Finance Bill 2013 for consultation before the release of a full Finance Bill in spring 2013. The majority of the draft documentation confirms previous announcements, but what are the main points relevant to you as an individual?

Inheritance tax –non-domiciled spouses

Our blog of 1 November 2012 raised the possibility of changes to the treatment of non-domiciled spouses for inheritance tax. Currently a UK domiciled individual can only transfer an exempt total amount of £55,000 during lifetime and on death. The draft legislation provides for this amount to be increased to £325,000, which is in line with the current nil-rate band for individuals.

Any future increases in the nil-rate band will be reflected for this purpose and the next increase is due in 2015 when the inheritance tax threshold will rise from £325,000 to £329,000.

One other option where you have a UK domiciled/non-domiciled couple is for the non-domiciled spouse to elect to become UK domiciled to enable assets and transfers between the couple to be tax-free for inheritance tax. The disadvantage of this is that all non-UK assets will then be part of the estate for inheritance tax purposes.

Statutory residence test

Changes to the statutory residence test have been in discussion and consultation since 2011. Final draft legislation has now been published and the new test will take effect from April 2013.

Whilst arguably much more complex, the new test should help provide more clarity and certainty to individuals who are affected.

The new test will involve three elements – an automatic residence test, an automatic overseas test and a sufficient ties test. It will be necessary for the individual to work through the tests in order to establish residency in the UK and HMRC will be providing a calculator to assist with this process.

Cap on income tax reliefs from April 2013

This has been one of the more talked about proposals following the 2012 Budget and subsequently led to the withdrawal of charitable giving from the cap. The cap was designed to limit the range of income tax reliefs available to individuals who were using them to substantially reduce or in some cases completely eliminate their income tax bill.

The income tax relief available in respect of certain uncapped reliefs has been confirmed as the greater of 25% of income and £50,000.

If you think you may be affected by any of the above provisions or would like to discuss wills and tax planning in more detail please contact Jane Molyneaux

14 December 2012 by

When is a house a House?

The recent Supreme Court decision in Hosebay v Day considered the qualification of property as a ‘House’ under the Leasehold Reform Act 1967 (the “1967 Act”) which enables certain tenants to purchase the freehold of their leasehold house.

21 December 2012 by

Onwards and upwards to bigger things

Squatting in residential property became illegal earlier this year but what of the immediate impact?

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