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    #26
    HSBC

    caja-dglh wrote:

    Estate planning and politics is a funny one. Obviously, Ed's spokesperson is exactly right - Ed has not avoided any tax. However, he has set up a framework that will look to minimize his inheritance tax liability when he dies. At which point he is dead and he will welcome you taking up the point with him then (though likely will not reply).
    When his mum dies, you mean, of course. Which is likely to be much sooner, and still leave him answering the awkward question about why he, like most people, hasn't paid inheritance tax, having entered into an arrangement planning for her death to do exactly that. I'm assuming here that Ed outlives his mum.

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      #27
      HSBC

      Rogin the Armchair Fan wrote: caja-dglh wrote:

      Estate planning and politics is a funny one. Obviously, Ed's spokesperson is exactly right - Ed has not avoided any tax. However, he has set up a framework that will look to minimize his inheritance tax liability when he dies. At which point he is dead and he will welcome you taking up the point with him then (though likely will not reply).
      When his mum dies, you mean, of course. Which is likely to be much sooner, and still leave him answering the awkward question about why he, like most people, hasn't paid inheritance tax, having entered into an arrangement planning for her death to do exactly that. I'm assuming here that Ed outlives his mum.
      Except his mother and Ed sold the house to David, for which Ed paid CGT. There's no there there.

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        #28
        HSBC

        What is a Deed of Variation.

        It appears to be an instrument that alters the distribution of assets provided for in a will after the death of the grantee. Obviously, it can only work if the original beneficiary consents to the distribution of assets they were entitled to by the original terms of the will to others.

        Comment


          #29
          HSBC

          Flynnie wrote:

          Except his mother and Ed sold the house to David, for which Ed paid CGT. There's no there there.
          Er, there is a "there" there, which is entering into a convoluted vehicle to avoid inheritance tax, which would have been around 40% of the price of the house, not the "capital gain" on the £5k or so it might have nominally gone up by between the time Ed bought it and sold it.

          It's not illegal, no-one's saying it is, but it is a tax avoidance vehicle, of the kind that Labour have said they would bring in provisions to remove.

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            #30
            HSBC

            ursus arctos wrote: What is a Deed of Variation.

            It appears to be an instrument that alters the distribution of assets provided for in a will after the death of the grantee. Obviously, it can only work if the original beneficiary consents to the distribution of assets they were entitled to by the original terms of the will to others.
            So basically if dad didn't get it right on the old inheritance tax minimization front, there's a chance to have another go?

            Are you given a Seperate allowance for inheriting stuff from each parent of something?

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              #31
              HSBC

              Er, there is a "there" there, which is entering into a convoluted vehicle to avoid inheritance tax, which would have been around 40% of the price of the house, not the "capital gain" on the £5k or so it might have nominally gone up by between the time Ed bought it and sold it.

              Hold on he bought it?

              Comment


                #32
                HSBC

                Rogin the Armchair Fan wrote: Flynnie wrote:

                Except his mother and Ed sold the house to David, for which Ed paid CGT. There's no there there.
                Er, there is a "there" there, which is entering into a convoluted vehicle to avoid inheritance tax, which would have been around 40% of the price of the house, not the "capital gain" on the £5k or so it might have nominally gone up by between the time Ed bought it and sold it.

                It's not illegal, no-one's saying it is, but it is a tax avoidance vehicle, of the kind that Labour have said they would bring in provisions to remove.
                No, it would have been 40% of the house's value at sale over the inheritance threshold, of which I don't know at the time and what is now £325,000. You can now double dip, so the threshold for the surviving spouse is £650,000.

                But there was no tax to pay. Inheritance tax was not due when Ralph Miliband died because his wife was still alive and she got the house. The deed of variation gave the boys a slice of the ownership, and then David Miliband bought both his mother and his brother out anyway, for which Ed Miliband paid CGT and presumably his mother as well.

                It's a hullaballoo over nothing. You might as well start shaming every person who says "take away" at the till of an EAT and then sits down in the corner to have their sandwich.

                Comment


                  #33
                  HSBC

                  It's a hullaballoo over nothing. You might as well start shaming every person who says "take away" at the till of an EAT and then sits down in the corner to have their sandwich.
                  This is the key point for me.

                  The second line of defence for any massive tax evader (after "what I did was legal") is always "everyone does it", and the media are complicit in conflating every possible action as being somehow equally "wrong".

                  It's bollocks.

                  Comment


                    #34
                    HSBC

                    It seems to be more the curious idea that if you can catch the labour leader out in a piece of minor hypocrisy, that makes tax avoidance and mind-boggling levels of institutional corruption... not that bad?

                    Comment


                      #35
                      HSBC

                      I'm struggling to keep track here of the flow of money. RM dies, leaving house to Wife. She Gives part of what she is going to give EM and DM after she dies to them at that point. It is below the inheritance tax threshold, so they don't pay tax. But if she suddenly dies, then the rest of the house will push them over the inheritance tax threshold?

                      However before this happens EM and Mum sell house to DM. EM pays money on the CG, and when mum dies and leaves money to DM He will then have to pay inheritance tax on that with the reduced Inheritance tax allowance.

                      or does he have a seperate allowance for Each parent? If yes, then I can see that there has been tax dodged. If not then I'm not sure what the issue is.

                      Comment


                        #36
                        HSBC

                        We're sort of doing what the Tories and HSBC want us to do here aren't we - nitpicking over Miliband's property arrangements and ignoring their massive corruption and criminality.

                        Not that OTF debates swing anything, obv.

                        Comment


                          #37
                          HSBC

                          1). RM dies. All assets uplifted to date of death value as estate is potentially liable to Inheritance Tax. Therefore any inbuilt gains on house during RM's lifetime written off.

                          2). Any assets passing to spouse on death are free from IHT under the spouse exemption rules (been around since 1974).

                          3). RM's estate has a Nil Rate Band, unused if all goes to wife. At the time of his death, if the Nil Rate Band wasn't used on death, it was lost forever.

                          4). Under a Deed of Variation, if it is signed within two years of the date of death, the IHT is read back to death as if the deceased included the terms of the Deed in their Will. Thus, if Mrs M alters her entitlement to the entire estate to leave assets to her sons, it's as if the late RM left it to them.

                          5). DM leaves the share in the property to her sons. They are, in principle, beneficiaries who attract a charge to IHT but provided the value of the assets are less than RM's Nil Rate Band, the tax is charged at 0% (same as the income tax allowance).

                          6). The CGT position on the house is as follows - Mrs M's share belongs to her, the boys have a quarter each.

                          7). EM sells his share and Mrs sells her share. EM's share is subject to CGT based on the difference in value between his acquisition price (value at date of RM's death) and the price DM pays, less the usual allowances. Mrs share, similar.

                          8). Mrs M dies. All assets in her estate are liable to IHT at the usual rates of 40% on the value above her Nil Rate Band (currently £325,000). This includes whatever remains of the net sales proceeds of the house. EM has to have his share of the estate subject to IHT, but the house belongs to him and for CGT purposes his acquisition price is the price he bought it from EM and DM.

                          If they'd wanted to be clever, they'd have stuck the property in a discretionary trust and held the gain over after mother died to avoid the Marshall vs. Kerr trap.

                          Comment


                            #38
                            HSBC

                            you lost me somewhere around no. 3.

                            Comment


                              #39
                              HSBC

                              The Awesome Berbaslug!!! wrote: you lost me somewhere around no. 3.
                              Come into the office, I'll do it face to face, it tends to work better that way. Or would a spreadsheet do? A lot of clients like the explanation in numbers.

                              Comment


                                #40
                                HSBC

                                how much p/h?

                                Comment


                                  #41
                                  HSBC

                                  £175 plus VAT. 10 years' PQE, STEP qualified, also three years prior to qualifying working in a trust admin department. At HSBC.

                                  Comment


                                    #42
                                    HSBC

                                    That Marshall v Kerr trap is a complete cunt.
                                    I've always said that.

                                    Comment


                                      #43
                                      HSBC

                                      I suspect Berbaslug's struggle with getting the tax planning mechanism here arises from a misconception as to what the taxable object is for inheritance tax. That misconception is implicit in asking whether EM "has a separate allowance for each parent".

                                      IHT is not, contrary to its name, a tax on inheritances. It's a tax on the estates of deceased persons. So the nil rate band attaches to the estate, one band per estate. So, just to labour the point, if some eccentric super-rich dude with a net estate worth £325 million decided to bequeath his fortune split equally between 1 million local members of the public, £325 each, only £325,000 (the dead guy's NRB) would be exempt, so each of the 1 million people would find that 99.9% of their £325 had been charged at 40%.

                                      However, parts of the estate which are left to certain beneficiaries (notably charities and surviving spouses) are exempt. And each individual has his or her own NRB. So, when EM's Dad dies, if he left all his assets to his wife, his NRB was effectively wasted. Whereas, if it were split between his wife and his kids, and then the rest passed when his wife died, that would make use of each of the parent's NRBs. It's hardly aggressive tax planning if that's what was going on. In fact, and Eggchaser will no doubt correct if this is wrong, I believe the IHT law has since been changed so that unused first decesased spouse NRB can be applied against the estate of the second spouse to die, in other words the law now automatically gives you the benefit of that planning device without you actually having to do it.

                                      Comment


                                        #44
                                        HSBC

                                        The second line of defence for any massive tax evader (after "what I did was legal") is always "everyone does it", and the media are complicit in conflating every possible action as being somehow equally "wrong".
                                        Have to agree with ursus there on the point of substance. A quibble on terminology: we distinguish in the UK between (legal, but sometimes very dodgy) "avoidance" and (downright illegal, concealment or fraud based) "evasion". Evasion is obviously out and out criminal, no grey areas at all, and that's what HSBC have been facilitating with their secret Swiss account assistance. (They've been promoting plenty of dodgy avoidance schemes too, I'm sure.)

                                        As regards "avoidance", there's a ridiculous conflation of standard tax planning (investing in ISAs, making sure you use allowances where it makes sense etc.) and participation in contrived extreme avoidance schemes of the Gary Barlow et al type, based on manufacturing imaginary "losses" which somehow are valid for tax relief purposes etc. The crap being thrown at Miliband here is part of that campaign to undermine his attack on avoiders by falsely equating his behaviour with theirs.

                                        Sometimes avoidance even shades into evasion when schemes are actually too flaky to have the tax law effect claimed, but insufficient info is disclosed about them to HMRC to enable HMRC to establish that and make the necessary tax assessment.

                                        Comment


                                          #45
                                          HSBC

                                          However, parts of the estate which are left to certain beneficiaries (notably charities and surviving spouses) are exempt. And each individual has his or her own NRB. So, when EM's Dad dies, if he left all his assets to his wife, his NRB was effectively wasted. Whereas, if it were split between his wife and his kids, and then the rest passed when his wife died, that would make use of each of the parent's NRBs. It's hardly aggressive tax planning if that's what was going on. In fact, and Eggchaser will no doubt correct if this is wrong, I believe the IHT law has since been changed so that unused first decesased spouse NRB can be applied against the estate of the second spouse to die, in other words the law now automatically gives you the benefit of that planning device without you actually having to do it.

                                          thanks for that. I now see the tax reduction mechanism.

                                          Comment


                                            #46
                                            HSBC

                                            Miliband has announced an investigation into the culture of HMRC

                                            Ed Balls and I are today announcing an independent, root and branch review of the culture and practice of HMRC when it comes to tax evasion and aggressive tax avoidance.

                                            While this government has had five years of inaction, we will begin from the first days we are in government and it will report within three months.

                                            It will shine a light on parts of our tax system that have been shrouded in secrecy under this government.
                                            Menawhile "Lord" Green has resigned as Chair of The City UK

                                            "He doesn't want to damage the effectiveness of The City UK in promoting good governance and doing the right thing, so has decided to step aside from chairing our advisory council. This is entirely his own decision."

                                            Which suggests that he's become pretty toxic.

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