The importance of financial planning

Financial planning is often an area that takes a back seat in busy lives. When there is no specific deadline to make a financial decision, it is very easy to say that you will address it in the future when life becomes less hectic. Taking the time to review your financial position, your personal wealth goals and objectives and consider the implications of whether your strategy will appropriately meet those goals can be an important exercise. Ensuring that you have an effective and appropriate strategy will likely afford you future flexibility and peace of mind. Below we discuss the areas that are beneficial to consider and review. A few easy steps can ensure optimal wealth planning strategies.

Consider using any unused carry forward UK pension contributions before UK tax year end

UK pensions have traditionally offered a great opportunity for UK and US persons alike to save towards retirement. From a UK perspective, pension contributions have typically allowed individuals to receive tax relief in the year of contribution, tax-deferred growth whilst funds remain within the tax wrapper, a tax-free pension commencement lump sum of up to 25%, and distributions from the pension at marginal tax rates. Additionally, UK pensions remain entirely outside of the pension-holder’s estate for UK inheritance tax purposes, providing a powerful planning tool for many families given the differential of estate tax thresholds between the UK and the UK. From a US perspective, to the extent that tax relief is limited, UK pensions have often provided a good opportunity to use excess foreign tax credits and establish cost basis in the account. This can be especially powerful if the individual anticipates living in the US during retirement where the US will generally have primary taxing rights on the UK pension under the US-UK tax treaty.

How an Excluded Property Trust can help a US person living in the UK plan for UK IHT

Many Americans living in the UK are considered to be non-domiciled for UK inheritance tax purposes. Under new rules set to take effect in April this year, a non-domiciled individual becomes deemed domicile for inheritance tax purposes when they have been resident in the UK for more than 15 out of the last 20 years. When an individual is deemed domicile for UK inheritance tax purposes, the UK will generally apply its inheritance tax rules on an individual’s worldwide assets.

The Hidden Value of Great Wealth Planning

Almost everyone worries about money, what the future may hold, and the decisions and choices that they will face along the way. Yet few realise that wealth planning is the key to sorting it all out.  Everybody needs it, but only a few have unlocked its true value.

For those who have, the equation between the value that they receive from their wealth manager and the fees that they pay needs to make sense.  Yet, because the benefits of good advice are often received in the far-off future, it is sometimes easy to miss, or dismiss, the value received along the way.  Market noise, emotions and periods of what may seem like inactivity on a wealth manager’s behalf, can also impact on the perception of value.  It is often easy to appreciate the value received in the first year, and easy to forget or appreciate the value on an ongoing basis.  The wealth planning relationship can be broken down into three key phases of value.

Financial considerations of becoming self-employed

Many people, at one point or another, think about leaving the ranks of conventional employment to start their own business. Sometimes the proposed business venture will be within the same industry and sometimes it will be a complete departure from their career to date. Taking the plunge into the world of self-employment can be scary but also incredibly rewarding. After all, being your own boss allows you to build something meaningful and should provide you with some flexibility that is often difficult to find when working for someone else. Giving credence to some of the important financial considerations can help you properly prepare for the transition.

HMRC confirms non-domicile changes are set to take effect in April 2017

Following the Brexit vote in June, there was speculation as to whether (and when) HMRC would follow through with publishing more detailed changes set to take effect in April 2017 for non-domiciled individuals who are long-term resident in the UK. However, on 19 August, HMRC published a second round consultation (open until 20 October) which provides a bit more insight into the details of the changes that are on the horizon.

The role of QDOTs for bi-national estate planning

There can be some great planning advantages in the case of a bi-national couple where one spouse is American. Opportunities often abound for example in choosing to own certain assets in either spouse name to optimise the tax implications for either US or UK purposes. For instance, the non-US spouse could take advantage of some of the UK tax-advantaged accounts and asset ownership structures in the UK that are generally not beneficial for a US person, whilst the US spouse could focus on utilising US tax-efficient vehicles.