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TaxRobin, Tax Consultant
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Experience:  International tax
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HelloRe: UK Tax mitigation strategy - need the appropriate

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30-12-14 17.10pm

Please would Just answer-answer! thank you.


Re: UK Tax mitigation strategy - need the appropriate experienced specialist, to answer. I have approx. £120,000 pa gross investment income, held jointly in my wife's and my name, with my wife having approx. £7,000 pa gross state pension and I have approx. £18,000 effective pension - just retired ( aged 63, with two grown up children). I have approx. £1.2M investment capital (£1M liquid, with £200K+ as shares in buy to let property - since sold home recently and renting at £1,500 pm). In a years’ time likely to buy home for £3/4M with approx. £1/2M investment capital, and £50,000+ investment income, plus hopefully further trading income £50,000+. From research I did a year ago, and very conscious of HMRC's crack down on tax avoidance schemes I would like to house all investment capital under a tax efficient roof (say a personal/family investment company?) , and also perhaps start -through an arm’s length gift - an offshore wealth fund (under say a foreign domiciled/resident foundation?) - as a hedge against anything going wrong for the UK, and for my children particularly. I know this requires UK and international tax expertise - and above all experience, and would like this query passed to such a person or persons, and would be grateful if a solid resolution could be advocated to direct me further accordingly. Thank you. Bwlch 23.34 pm 29-12-14

Hello and thank you for allowing me to assist you.
The information you request deals with a complicated subject. I can and will advise on the basics of each but strongly encourage you to seek professional advice from your local adviser.
First, the main benefit of a personal investment company (PIC) comes through using it as a long term investment vehicle, enabling it to retain higher post-tax profits (as corporate tax rates are generally lower than personal tax rates) which can be reinvested for quicker
growth without additional personal taxes applying.
Dividend income is generally tax free;
Gains generally taxed at 20% with inflation taken into account;
Rental losses can be offset against other income in the company;
Portfolio and other management fees can be deducted for tax
Investment income and gains generated could be paid into a pension
A PIC can allow investment growth to fall outside an estate for Inheritance Tax purposes (as long as the donor is not a shareholder) which could result in a 40% tax saving.
Second, the tax rules for non-resident trusts are very complicated. Although there are general rules that apply to all non-resident trusts.
You the settlor (the person who put assets into a trust) and you - or your spouse or civil partner - can benefit from the income or capital of a non-resident trust, then you’ll have to pay tax on the trust’s income as if it’s your own income.
A trust may have to pay Capital Gains Tax if assets are sold, given away or exchanged (disposed of) and they’ve gone up in value since being put into trust. Yes, there is an allowance but it needs to be reminded that CGT could still apply.
Trusts, including non-resident trusts may have to pay Inheritance Tax on assets in the trust. Non-resident trusts will only have to pay it on assets situated outside the UK if you (the settlor) was domiciled (or deemed domiciled) in the UK when the assets were put into the trust.
I know you said you wanted a solid resolution but this is not the forum to expect that. What you need is to retain a professional adviser that can go through your assets and potential assets in depth.
I do hope this general and basic information has at least assisted you in understanding the 2 options you stated.
Customer: replied 3 years ago.


Many thanks for your very clear cut answer, and my apologies for the delay in getting back to you due to the New Year.

Given my case, is there any other option other than a personal investment company for UK tax mitigation?

Secondly re creating a 'contingency' wealth fund abroad for my family's future, could you direct me to where I go to find reputable 'international' tax advice - is there a recognized directory or list of reputable firms?

I will pay extra for this and for your original answer, which I much appreciate.

Kind regards

Bwlch523 11.55 am 2-1-14

Discretionary trusts are still popular in IHT planning as the lifetime nil rate band can be settled on trust without a lifetime inheritance tax charge.
We are not really allowed to endorse any individual or company on JustAnswer. There is a company (Grant Thornton) that has numerous offices in the UK. Telephone: +44 (0)151(###) ###-####in Liverpool. They could advise you on an office closer to you.
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