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10 top tips for Inheritance Tax planning

1. Work out the tax

The first step in any planning has to be to establish the size of the problem. Only then can you begin to think about what solutions might be suitable for you. Start by adding up the value of all of your assets. If you are worth more than £325000, then Inheritance Tax can be an issue.

Using vehicles for business and private purposes

There are a number of circumstances where care needs to be taken in the way in which claims are made for the business use of a vehicle, usually a car, which has duality of use – business and personal. We have listed below a few issues that businesses and private car owners should be aware of.

Claiming capital allowances on the acquisition of a building

When a commercial building is acquired it will invariably include an element of plant and a value should be established on this element in order that valuable capital allowances are claimed.

Establishing values on a purchase can be complicated as the acquisition may relate to a number of assets.  These could be:

Cumbrian businesses could be missing out on millions of pounds of unused tax allowances on commercial property

Research has shown that nine in 10 owners of UK commercial property will be due a rebate because of unused capital allowances. Properties such as hotels and nursing homes typically contain fixed plant of between 20% and 35% of the purchase price.  This can make a massive difference to a business’s tax bill as to whether these “hidden” allowances have been claimed or not.  Whilst loose items such as white goods and carpets are usually claimed, it is the fixed items such as heating systems, air conditioning systems and electrical systems that are often missed.

Boost your Investment returns using the CGT exemption

The Capital Gains Tax (CGT) exemption is a valuable allowance. At £10,900 for 2013/14, it's worth £3,052 to higher rate taxpayers paying tax at 28% on their gains.

But it's a 'use it or lose it' allowance. It can't be carried forward.

There's a monetary argument for investors sitting on an investment portfolio with significant capital gains to realise enough each year to fully use their exemption. The proceeds can be reinvested, but the accrued capital gains within the portfolio will reduce.

Paying for IHT

Inheritance Tax is an unwelcome burden to families on the death of a loved one. It hits straight away as it has to be paid even before Probate can be obtained and control established over the assets of the deceased.

Indeed, this can itself cause difficulties as Executors do not have access to assets without Probate. This apparent 'Catch 22' situation is fortunately resolved by the willingness of banks to release or lend money to pay the tax.

Inheritance Tax

I read an article recently which suggested that 35% of parents were unwilling to leave an inheritance to their children as their childrens’ spouses could eventually end up with some of the assets if there were to be a subsequent divorce. However, what about the remaining 65% of parents who would be prepared to give away their assets, despite this risk?

Accountancy Trainees Reach National Apprentice Business Challenge Final

Accountancy firm Armstrong Watson is extremely proud to announce that four of its accountancy trainee students have successfully secured a place in the Institute of Chartered Accountants in England and Wales Apprentice Business Challenge 2013 National Final, following a regional heat In Leeds last month.

Death & taxes

It is sometimes said that death & taxes are unavoidable. With Inheritance Tax (IHT) these issues are combined which does, perhaps, explain why it is such an unpopular tax.

It is also a tax that has been rising steadily in real terms for the last four years and the Government announced in March that this would continue for at least the next six years.

Advisory fuel rates for company cars

Many employers and employees make use of the advisory fuel rates published by HM Revenue & Customs. The rates apply where the employer:

• reimburses employees for business travel in company cars where the employer does not provide fuel, or,
• requires employees to reimburse the cost of employer provided fuel used for private travel, so potentially avoiding a private fuel benefit charge.

The advisory fuel rates are also acceptable for VAT purposes providing VAT receipts for fuel purchases are retained.