General Information
Helpful Financial Information
Capital Gains Tax
For 2008/2009, individuals are entitled to an annual exemption from capital gains tax of £9,600 and trustees to £4,800.
If you think that your investments have made substantial unrealised gains and you have not yet made use of your annual allowance, you should consider encashing sufficient investments to utilise your entitlement. You could consider reinvestment in an ISA (subject to the ISA limits), reinvestment by a spouse/civil partner or reinvestment into a similar holding.
Consideration should be given to transferring assets between spouses/civil partners before encashment to enable each to use an annual allowance.
It is important to consider whether any investments have made a loss and whether excess gains could be offset by any losses. Losses can be carried forward indefinitely, so it is important to include gains, losses and the annual exemption in any calculation to determine how to maximise relief.
Civil Partnerships
You are probably aware that the Civil Partnerships Act 2004 has now come into force with the first registrations have taken place in December 2005. A registered civil partnership is designed to be very much equivalent to a marriage for same sex couples. It carries both rights and responsibilities. In very broad terms, Registered Civil Partnerships will attract the same legal and tax protections/disadvantages as a traditional marriage.
Perhaps the most important point to note is that a civil partnership must be registered in order to fall within the new rules. Just as a heterosexual couple living together do not benefit from the protections of a married couple, a same sex couple will be treated no differently under the new law unless their relationship is registered.
Registration of Civil Partnerships must be made in the presence of a Civil Partnership registrar and will require two witnesses. As with a marriage, the intention to register a Civil Partnership must be announced, publicly, 15 days (England and Wales) prior to the Registration.
It will be necessary for both parties to the partnership to be single so that previously married individuals will need to obtain a divorce. This is an important point as many individuals will not have bothered to seek a divorce since no form of legally recognised relationship was previously available.
Civil Partnerships will be dissolvable in much the same way and with similar grounds, as divorce. As with divorce, the Civil Partnership will only be capable of dissolution after one year.
Inheritance Tax
Certain lifetime gifts can be made without giving rise to an inheritance tax charge. For 2008/2009 the annual gift exemption is £3,000 and it is worth considering making a gift of this amount if you are in a position to do so.
In addition, if you did not make use of any part of the £3,000 annual gift exemption to which you were entitled for 2007/2008, then this can be utilised before 5th April 2009. Please note that any unused allowance for the earlier tax year must be used before the current year's allowance. It can only be carried forward for one year and then, if unused, it is lost.
Unlimited gifts can also be made in the form of Potentially Exempt Transfers (PETs). Provided you live for 7 years after making the gift, it will be free of inheritance tax.
Please ensure that, should a gift be made by cheque, sufficient time is given for the cheque to clear before 5th April; otherwise it will not be included in the current year's total.
Gifts of £250 can be made to any number of individuals without giving rise to an inheritance tax charge. Gifts of varying amounts can also be made between family members on the occasion of a wedding/civil partnership ceremony, without any inheritance tax liability.
Contact Us For More Details
For further information on any of the above, please do not hesitate to get in touch.