Q&A: Your money queries
Your money queries are answered by Peter Rutherford, senior director of Rutherford Wilkinson Ltd, Chartered Financial Planners.
Q: I AM looking to retire abroad and have some investment properties I would like to sell. If I am living abroad will I have to pay capital gains tax here?
A: You will be liable to capital gains tax in the UK on any disposal while you live abroad on assets you acquire before you leave the UK until you have been either non-resident or not ordinary resident in the UK for at least five complete tax years. The tax year runs from April 6 to April 5 so if you were to leave now you would only be outside the UK capital gains tax regime from April 6, 2016. There can be some other reliefs and you need to take qualified advice in this regard and do not forget that you may well be liable to the equivalent of capital gains tax in your new country of residence.
Q: My mother is widowed and has quite a valuable house. She wishes to gift that to myself and my sister but still live in it. I understand that if she survives seven years it will not be part of her estate for inheritance tax purposes. Is this correct?
A: The short answer is “no”. The gift would be deemed by HMRC to be a gift with reservation. In other words she has reserved the right to live in the property and therefore has not in reality gifted it at all. However, the situation would be different if she were paying you a market rent for the property. That would also have the advantage of reducing her estate further as she is paying money out to you and your sister. However, you must bear in mind that this would then be income for you both and subject to income tax. It is extremely important that you take qualified independent financial advice.
Q: I manage my own business that is a limited company. I am concerned that the tax rate is to rise to 50% next year and it will affect me. Is there anything I should be seeking to do before the end of this tax year when the highest rate of income tax is still only 40%?
A: I would suggest that you consider paying a special dividend before the end of the tax year. Clearly you need to deal with the appropriate formalities and you have to have a profit to support the dividend payment. However, once the dividend has been paid you can then lend it back to your company to assist.
To request a free "Investor's Guide" and put any questions you would like answered please contact me at Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS. Website www.rwpfg.co.uk . Telephone 0191 217 3340 or email peter.rutherford@rwpfg.co.uk
Rutherford Wilkinson Ltd is authorised and regulated by the Financial Services Authority.
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