Inheritance Tax Planning

Inheritance Tax Planning

What is Inheritance Tax?

Inheritance Tax is a tax applied to the estate of someone who passes away.

The standard Inheritance Tax rate is currently 40% and it is charged on the part of your estate that is above the threshold set by the government.

There is currently no Inheritance Tax to pay on your estate should you leave everything to your spouse or civil partner, a charity or a community sports club.

Relevance of Domicile to Inheritance Tax

Domicile is a concept of general law and not tax law. An individual is normally domiciled in the country where they have their permanent home, being the place with which they have the closest family, social and economic (business) ties and to where at some point in the future they intend to return, e.g. on retirement.

There are three types of domicile: a domicile of origin, a domicile of dependence and a domicile of choice.

  1. Domicile of origin: this is normally your father’s domicile at the time of your birth. A domicile of origin can never be extinguished, but it can be displaced by acquiring a domicile of choice or dependence.
  2. Domicile of choice: there are two elements to acquiring a domicile of choice: (i) you must leave your country of domicile and settle in another country; and (ii) you must provide evidence that you intend to live there permanently or indefinitely.
  3. Domicile of dependence: a dependent person has the domicile of the person on whom they are considered to be dependent by law. Dependent persons are unmarried children under the age of 16 and mentally disordered persons.

References to someone who is UK domiciled, means that they are domiciled in either England and Wales, Scotland or Northern Ireland.
Even if you are not domiciled in the UK under general law, the Revenue will treat you as ‘deemed domiciled’ in the UK for Inheritance Tax if at the date of death:

  1. an individual has been resident in the UK for 15 out of the past 20 years, or
  2. an individual was born in the UK with a UK domicile of origin and return to the UK having obtained a domicile of choice elsewhere.

If you are domiciled or deemed domiciled in the UK, then Inheritance Tax applies to your worldwide assets.

If you are not domiciled or deemed domiciled in the UK, then Inheritance Tax applies only to your UK assets.

Where assets pass from a UK domiciled spouse or civil partner to a non-UK domiciled spouse or civil partner, then the spouse exemption is limited to the Nil Rate Band.

What can be done to mitigate Inheritance Tax?

There are a number of ways in which Inheritance Tax can be mitigated with careful planning. However, the government regularly changes the rules so it is important to review any planning put in place periodically to ensure the planning has the desired effect.

The common Inheritance Tax planning reliefs are as follows:

  1. Business Property Relief which may reduce the value of a business or its assets for the purposes of Inheritance Tax.
  2. Agricultural Relief may also be applied to reduce the value of your estate if your estate includes a farm or woodland.
  3. Inheritance Tax reduced rate of 36% may be applied to your estate if you leave at least 10% of your net estate to charity.
  4. Relief from Inheritance Tax on gifts which you make from your estate providing you survive 7 years of the gift.

Our Private Client team are able to advise you on a wide range of Inheritance Tax planning options, including those listed above and many others. We will conduct a thorough review of your current exposure before providing you with specific and tailored solutions to meet your needs and achieve the best results for you.

General Advice on All Related Aspects of Development Law, Including Highways Agreements, Rights of Way & Compulsory Purchase

General Advice on All Related Aspects of Development Law

We can help with planning due diligence exercises, and can advise on:

  • All types of agreements for works in the highway or for the adoption of new highways
  • Rights of way issues including stopping up and diversions
  • Environmental assessment and environmental warranties
  • The impact of restrictive covenants on planning
  • What to do if threatened with compulsory purchase
  • Village greens and commons
  • The implications of rights of light
  • The potential use of permitted development rights as an alternative to a full planning application; and
  • Community Infrastructure Levy problems.

Advising on Development Plan Concerns

Advising on Development Plan Concerns

We can advise on:

  • Promoting your land through the SHLAA or development plan process
  • The implications of allowing others to promote your land; and
  • Objecting to strategic proposals.

Negotiating Section 106 Planning Obligations

Negotiating Section 106 Planning Obligations

The introduction of Community Infrastructure Levy led many to assume that the s.106 planning obligation regime (providing for legal obligations to be entered into to mitigate the impacts of development) would disappear. Instead, the regime has had renewed importance, used in relation to financial contributions to infrastructure, public open space, affordable housing and other matters. Limitations on the use of planning obligations are set out in the Community Infrastructure Levy Regulations 2010; they must be (1) necessary to make the development acceptable in planning terms, (2) directly related to the development, and (3) fairly and reasonably related in scale and kind to the development. All those with an interest in the land – including mortgagees – are usually required to join in, which can give rise to problems and delay. We can:

  • Negotiate and draft s.106 agreements
  • Deal with the concerns of secured lenders who are being asked to join in; and
  • Deal with variations of existing agreements, under s. 106A of the Act.


Advising on Enforcement Notice Problems

Advising on Enforcement Notice Problems

The use of enforcement powers can give rise to criminal prosecution, and the use of Proceeds of Crime Act powers. We can:

  • Seek to negotiate away problems
  • Assist in applications for Certificates of Lawfulness
  • Deal with enforcement notice appeals; and
  • Represent you in criminal proceedings.

Advising on Heritage Law, Including Listed Building Consent Applications & Appeals

Advising on Heritage Law, Including Listed Building Consent Applications & Appeals

The protection of heritage assets has implications for the entire planning process. We can assist:

  • By helping with listed building and conservation area consent appeals
  • By suggesting ways to mitigate the impact of proposals on designated heritage assets such as listed buildings, scheduled monuments and conservation areas, and non-designated heritage assets such as “locally listed” buildings; and
  • By representing you if you are prosecuted for alleged criminal offences arising from legislation.

Dealing with All Aspects of Planning & Listed Building Appeals

Dealing with All Aspects of Planning & Listed Building Appeals

The remedy for a refusal is to appeal. We can:

  • Advise on appeals against refusal (or non-determination), including advising on the prospects for the appeal
  • Handle every aspect of the appeal process, including advising on the process (written representations, hearing or local inquiry) representing you during the appeal (including advocacy) and co-ordinating other experts, if needs be; and
  • Advise on the nuances of appeal decisions, including challenge if needs be.

Assisting with Planning Applications

Assisting with Planning Applications

A stitch in time may save nine, and in that context there are many reasons why it may be best if we acted as your agent when making a planning application:

  • An application may result in a planning permission with onerous conditions, which could have been negotiated away
  • An application may result in the need for s.106 planning obligations, and early involvement can save both time and money; and
  • An application may result in a refusal and the need to consider reapplying, or lodging an appeal, or both, and timely advice would be at a premium.


Advice on Complicated Planning-Conditional Acquisitions

Advice on Complicated Planning-Conditional Acquisitions

When seeking to acquire land (or sell) on a planning-conditional basis, expert advice is necessary to minimise risk, including consideration of:

  • The proposed timescales for dealing with planning, and when it is reasonable to extend these
  • Careful consideration of potential onerous conditions
  • Deductible expenses, including CIL and s.106 and the risk of “double dipping”
  • Viability and affordable housing
  • The threat of judicial review, and what it might mean for your deal.

Personal & Business Tax

GSC’s Tax Team is internationally focused. Our clients are highly mobile, business leaders…

International Corporate Tax

International corporate tax services in London

GSC’s Tax Team is internationally focused. Our clients are highly mobile, business leaders and entrepreneurs based in regions such as Africa, the Middle East, the former Soviet Republics and South East Asia. Meeting their needs requires more than legal expertise; it takes cultural awareness, a global mind set and broad linguistic capabilities.

This is why GSC tax lawyers come so highly recommended. They have built up a high degree of expertise in understanding high-net-worth individuals in all tax aspects of corporate, commercial and financial transactions, with a particular understanding of those transactions’ impact on personal tax.

  • We provide comprehensive tax planning advice for foreign individuals looking to relocate or invest into the UK
  • We help entrepreneurs realise the sale of their successful ventures in the most tax efficient manner
  • We advise on the most tax efficient structure to own UK Real Estate
  • We use our cross-border experience and knowledge to develop tax structures for inward investment in the UK and internationally.