Why You Should Use a Family Investment Company to avoid Inheritance Tax on large Estates
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- Опубліковано 24 сер 2020
- Why use a Family Investment Company to avoid Inheritance tax on Large estates | Bluebond Inheritance Tax
For people with large UK estates which are likely to exceed £2 million, the UK inheritance tax becomes very expensive. This is especially true for people with large investment property portfolios.
One potentially very good solution is to set up a Family Investment company or FIC. In fact for people with estates that exceed £4 million it is probably the best option.
In this video, Charles explains what a Family investment company is, how it works and what the main benefits are to people with large estates.
He explains the different tax implication and especially the long term savings on income tax and capital gains tax.
He also explains the potential disadvantages and why this planning is best done in conjunction with Trusts planning and also Business relief plans.
For people with large estates over £2 million or with assets of £1 million over the value of their main residence, this video is essential viewing.
Experienced inheritance tax planning advice is essential.
If you have any questions on UK inheritance tax please use the comments section below or visit our website at www.bluebond.co.uk/contact-us
Really useful and balanced video on FICs. Thanks a lot. I have subscribed
Thanks Ravi - I am glad we could help
Thanks . Very useful video.
Great - Glad you found it useful. Consider joining one of our Saturday webinars for more information on FICs
Thanks - really useful video. I'll explore your others. One question - when moving properties to an FIC, is there an issue with mortgages - if I have (relatively cheap) BTL mortgages for properties owned in my own name, these would presumably need to be paid down and replaced with company BTL mortgages (generally a couple of percentage points more expensive)?
Hi James - Mortgages is always an issue. Some lenders will OK the move no problem others will charge higher rates. After setup of a partnership or LLP you have 3 years to sort out the mortgages but you should understand the differences in mortgages your case as it is very individual and propery based.
I looked at this and took a lot of advice from a Good Mortgage broker and I found they a breach in terms and conditions and if you breach the lender can ask for loans to be repaid The only sound way I found is to remortgage out via a new lender most likely a Bank I found that the Interest rate would rise and costs of arranging need to be paid upfront and the lender may ask for capital and repayment i pulled away from doing it because of costs of re arranging and the fees to set up a FIC I am effected by S24 but I am going to stick with where i am after a lot of thought I think if i was buying new property i would do it via a FIC but i wont move my own property into a FIC I also have a nag in the back of my mind that HMRC may challange this point of transfer into a FIC
You mentioned that the FRT was also a good option but my understanding is that this is a discretionary trust which means that any income arising within it is subject to 45% flat income tax rate and dividend at 39.5% approx. Therefore a big disadvantage? Have I got it wrong?
Hi Ravi - This type of trust is atype of discretioanry trust but is restricted to pooled investments like Unit trusts and OEICS. These are usually held subject to an offshore bond and so suffer no income tax until withdrawal and then it is at the highest marginal rate of the person recieving the return
Hi.. Great video.. Can I ask
Does it need to be one property worth 2m or can it be say 3 properties with total of 3m to utalise this?
Also would crypto currency be in this as well as it is considered an asset?
Thanks very much..
Hi Paul - Thanks for your appreciation. Yes it can be any number of properties with no upper limit which makes it very useful for professional landlords who wish to retain control of the income streams from their portfolios. As mortgages can also be offset completely ( same tax rules as a normal LTD company) this is also a big advantage for Landlords caught by the Section 24 rules. A FIC can hold any assets in the same way that a LTD company can hold any assets
Thanks so much for letting me know that.. Really useful..
And do you know how that would be with . Holdings in Bitcoin that is considered an asset and has capital gains tax...?
@@AniaForrest For assets that are not property CGT is an issue that needs to be addressed.
There is another way which you have not mentioned and its Life Cover in trust and the use ofSIPP for IHT planning also i think i am right in saying HMRC allow IHT to be paid over a 10 year period for land and property IHT
Thanks for your comment which I appreaciate is trying to be helpful. Obviously I cannot mention every avenue in one video as that would lead to confusion not clarity. Life cover is always a possibility but can be very expensive and often not attainable if there are health issues and many people are capital rich and income poor. SIPPS like all recognissed UK pension are not subject to IHT but I thionk thats already well understood by most of our prosepective clients