Our website is set to allow the use of cookies. For more information and to change settings click here. If you are happy with cookies please click "Continue" or simply continue browsing. Continue.

  • Modern Approach to Lifetime Tax Planning for Private Clients (with Precedents), A

Modern Approach to Lifetime Tax Planning for Private Clients (with Precedents), A


Provides practitioners with help and guidance on everyday planning and drafting issues

A 10.3% VAT charge will be added to this product at the checkout as it includes a CD-ROM.

A Modern Approach to Lifetime Tax Planning for Private Clients (with Precedents) deals with the legal aspects of tax planning for private clients. It is a companion volume to the popular A Modern Approach to Wills, Administration and Estate Planning (with Precedents).

This work begins by looking at the essential legal framework of giving and tax law through a combination of detailed and authoritative commentary, worked examples and precedents. It then examines specific topics including: trusts and settlements, the family, and looks at particular assets such as the family home, CGT main residence relief, chattels, businesses and farms, investments, and insurance based products. It goes on to examine tax planning using statutory reliefs and exemptions including joint ownership of land/sharing arrangements, gifts for family maintenance, normal expenditure out of income and charitable giving.

This new edition includes:

  • Introduction of the Residential Nil Rate band by the Finance (No 2) Act 2015
  • Effect of the Taxation of Pensions Act 2015
  • The impact of the Inheritance and Trustees Powers Act 2014
  • Changes to IHT charges on relevant property trusts
  • Full text of the STEP Standard Provisions and the STEP Investment Policy

The authors’ narrative commentary is supplemented by numerous precedents which are included on an accompanying CD-ROM, allowing users to download and adapt each document as necessary.

Preface to the Second Edition
Table of Cases
Table of Statutes
Table of Statutory Instruments
Table of Abbreviations

Section I
Essential Law on Giving

  • Minors
  • Individuals who lack mental capacity
    • The common law test of capacity
    • The Mental Capacity Act 2005
    • Which test applies?
    • Gifts on behalf of persons lacking capacity
  • Void or voidable?
  • Time at which capacity tested
  • Bankrupts
  • Gifts that can be set aside for the benefit of creditors
The Power of Attorneys and Deputies to Make Gifts
  • Lasting powers of attorney
  • Restrictions on attorney’s power to make gifts
  • Enduring powers of attorney
  • Deputies
  • Invalidity of unauthorised gifts
  • Applications to court for consent to make gifts
  • Factors influencing the court
    • In the Matter of Re G (TJ)
    • KGS v JDS
    • Other recent cases
  • Protection
  • Planning for continuing gifts
    • Gifts where donor retains some capacity
Undue Influence
  • Meaning
  • Proof of undue influence
  • The presumption of undue influence
  • Independent legal advice
  • Unconscionable transactions
Formalities: Perfecting the Gift
  • Problems in getting documents signed
    • Parties not in same location
    • Electronic documents
  • Deeds
    • When is a deed necessary?
  • Other writing
  • Particular assets
    • Assignment of the benefit of a contract
    • Securities
    • Equitable interests
    • Assignments of intellectual property rights
  • Delivery (chattels)
  • Donatio mortis causa
  • Formalities in general
Creating a Settlement
  • The three certainties
    • Certainty of intention
    • Certainty of subject matter
    • Certainty of objects
  • Formalities for creating a voluntary settlement
    • Transferring property to trustees
    • Declaration of trust
    • Reasons for using a declaration of trust
    • Enforceable contract to enter into a settlement
  • Precedents
    • Precedent 5.1: Declarations of trust (warning comments)
    • Precedent 5.2: Declaration of trust of life assurance policy
    • Precedent 5.3: Declaration of trust of controlling shareholding
    • Precedent 5.4: Simple form of voting trust in relation to shares
    • Precedent 5.5: Declaration of bare trust for a minor
    • Precedent 5.6: Declaration of bare trust for a minor to be used as a receptacle to receive family money
Perpetuities and Accumulations
  • The old rules
  • The new rules
  • Special powers of appointment
  • Accumulations of income
    • The old rules
    • The new rules
  • Post-death variations of wills executed before 6 April 2010
  • Trusts of pension death benefits (spousal by-pass trusts)
  • Precedent
    • Precedent 6.1: Declaration of 100-year perpetuity period
Modifying Trusts: Retaining Flexibility
  • Modifying trusts by the exercise of dispositive powers
    • What is meant by a ‘dispositive power’?
    • Types of dispositive powers
    • The exercise of a dispositive power
  • The rule in Saunders v Vautier
    • Re Brockbank and the appointment of new trustees
  • When a court application is needed
  • Trustee Act 1925, s 57
  • Variation of Trusts Act 1958
    • Meaning of ‘benefit’
    • What is a variation?
    • Using the Act to obtain a new perpetuity period
  • Precedents
    • Precedent 7.1: Saunders v Vautier variation
    • Precedent 7.2: Removal of trustee by beneficiaries under the 1996 Act
Providing Information to Beneficiaries
  • The Re Londonderry case
  • The Rosewood case
Letters of Wishes
  • What is a letter of wishes and when is it appropriate to use one?
  • The status of letters of wishes.
    • The Breakspear case
  • Drafting letters
    • Trustees’ reliance on letter of wishes
    • The position of protectors
  • Precedent
    • Precedent 9.1: Simple letter of wishes
Presumptions of Resulting Trust and Advancement
  • Resulting trusts
    • Presumed resulting trusts
    • Automatic resulting trusts
  • Presumption of advancement
  • The family home
  • Joint bank accounts
    • Resulting trust or outright gift?
    • Gift of balance in account at death
    • Inheritance tax implications
    • Double taxation?
    • Gifts from joint accounts

Section II
Essential Tax Law

IHT: General Principles
  • Meaning of a chargeable transfer of value
    • Meaning of ‘estate’
  • Occasions of charge to inheritance tax
    • The charge on settled property
    • Taper relief
  • Tax calculations and the PET trap
    • Fall in value of gifted property
    • PETs made within 7 years of death
    • Combination of PETs and chargeable transfers made within 7 years of death
    • The PET trap
  • Dispositions which are not transfers of value
    • Non-gratuitous transactions
    • Dispositions for family maintenance
  • What is a potentially exempt transfer?
  • Exemptions for lifetime transfers
    • Annual exemption
    • Order of gifts in a tax year
    • Small gifts
    • Normal expenditure out of income
    • Gifts made in consideration of marriage or formation of a civil partnership
  • General exemptions
    • Spouses and civil partners
    • Gifts to political parties
    • Gifts to charities and national institutions
    • Heritage property
    • Death on active service etc
IHT: Reservation of Benefit and the POAT Rules
  • The gift with reservation legislation
    • GWR is a penal rule
  • There must be a ‘gift’ of property
  • Identifying the property subject to a reservation (‘tracing’)
  • Tracing and settled property
  • Taking back a benefit in part only of the gifted property and de
  • No time-limit for the reservation of benefit rules
  • Collateral benefits (limb 2)
  • The Ingram case, shearing arrangements and the 1999 amendments
    • Reversionary leases
    • The 1999 legislation
  • The Buzzoni case
    • Terms of the underlease
    • Position on the death of the deceased
    • Decision of the Upper Tier Tribunal
    • The decision of the Court of Appeal
  • Shearing today
  • GWR and trust reorganisations
    • The scope of FA 1986, s 102ZA
    • Implications of s 102ZA
    • Limited effect of s 102ZA 
  • The full consideration escape
  • IHT exempt transfers
  • The pre-owned assets income tax charge (POAT)
  • The impact of GAAR
IHT: Taxation of Settlements
  • Overview
    • What is a settlement?
  • Settlements created before 22 March 2006
    • Pre-22 March 2006 settlements
    • Interest in possession settlements
    • Non-interest in possession settlements
    • Relevant property settlements
  • Settlements created on and after 22 March 2006
    • Practical results
  • The taxation of relevant property settlements
    • Creation
    • Anniversary charges
    • Planning
    • Exit charges
    • Exit charges in the first 10 years
    • Additions to a settlement (IHTA 1984, s 67)
  • The taxation of qualifying interest in possession settlements
    • Lifetime terminations
    • An exception
    • Planning
CGT: General Principles
  • Chargeable assets
  • Meaning of a disposal
  • Calculating the chargeable gain
    • Gifts
  • Rates of tax
    • Annual exemption
    • Entrepreneurs’ relief
  • Loss relief
  • Exemptions and reliefs
    • Chattels disposed of for £6,000 or less and wasting assets
    • Charities
    • Life policies
    • Main residence
    • Hold-over relief
    • Non-residents
  • Death and CGT
    • The dilemma
CGT: Settled Property
  • Meaning of settled property
    • When property is not settled
  • Creation of a settlement
  • Actual disposals by trustees
  • Deemed disposal when a person becomes absolutely entitled (the‘exit charge’)
    • When does a person become absolutely entitled?
  • Deemed disposal on the death of a ‘qualifying’ beneficiary
  • Traps
  • The disposal of a beneficial interest in settled property
    • The basic rule
    • Position of a purchaser
    • Purchaser becoming absolutely entitled to any of the settled property
    • Other cases when the dispositions may be chargeable
  • Offshore trusts
  • Use of trust losses by a beneficiary
    • Pre-1999 rules
    • The 1999 restrictions
    • Adding property to the trust
  • The sub-fund election
    • Effects of making an election
Other Taxes
  • Income tax
    • Ownership of income
    • Income tax and trustees
      • Rates of tax payable by trustees
      • The trust and dividend trust rates
      • Trustees’ liability under ITA 2007, s 496
      • Beneficiaries with a right to income
      • Beneficiaries of accumulation and discretionary trusts
      • Giving beneficiaries a revocable right to income
    • Anti-avoidance: the settlement legislation
      • Gifts to spouses or civil partners
      • Settlements for minor, unmarried children of the settlor
    • Waiving income
      • Waiver of remuneration
      • Waiver of dividend
      • Waiver of interest
    • The foreign element
  • Stamp duty and stamp duty land tax
    • Stamp duty before 1 December 2003
    • The introduction of stamp duty land tax
      • Limiting stamp duty to instruments relating to stock or marketable securities
  • VAT
  • Terminology
  • A climate of hostility
  • The weapons of HMRC
  • The general anti-abuse rule (GAAR)
    • The Guidance
      • The correct approach to the legislation
      • Taxpayer options
    • Link with the rest of the tax legislation
    • The ‘double reasonableness’ test
    • Legislative bear traps for the taxpayer
    • What the IHT examples tell us
  • Changes in FA 2014
    • High risk promoters
    • Settling tax on failed schemes
    • Accelerated payment of tax on marketed tax avoidance schemes
    • What is DOTAS?
    • How DOTAS works for the direct taxes
      • Who is a promoter?
      • Designing a scheme
      • Making a firm approach
      • Making a scheme available for implementation by others
      • Organising and managing a scheme
      • Where there is no promoter within the meaning of the legislation
      • Exemption for co-promoters
      • When does an obligation to disclose arise?
    • Hallmarks
      • Hallmark 1: Confidentiality
      • Hallmark 2: Confidentiality where no promoter
      • Hallmark 3: Premium fee
      • Hallmark 5: Standardised tax products
      • Hallmark 6: Loss schemes
      • Hallmark 7: Leasing arrangements
      • Hallmark 8: disguised remuneration employment income
    • ‘Tax advantage’
    • Timing of notification
      • Exemption for substantially the same scheme
      • Procedure
    • Client Lists
    • Penalties, investigation and enforcement
  • DOTAS and IHT
    • What does DOTAS apply to?
    • How to report an IHT scheme reference number (SRN)
    • Grandfathered arrangements and white list
      • Evidence of grandfathering
      • HMRC grandfathered list
  • The proposed extension of DOTAS to all IHT schemes
  • How DOTAS works in relation to stamp duty land tax (SDLT)
    • Rule 1 to the Schedule
    • Rule 2 to the Schedule
    • DOTAS and ATED

Section III
Trusts and Settlements

When to Make a Settled Gift: Drafting Considerations
  • The attractions of settlements
  • The approach of the Court of Protection to the creation of personal injury trusts
    • In the matter of HM; SM v HM
  • Drafting settlements
    • Who are to be the trustees?
    • Identifying the beneficiaries
    • The beneficial trusts
    • Dispositive powers
    • Power to transfer trust property to another settlement
    • Administrative powers
  • Precedent
    • Precedent 18.1: Discretionary trust with drafting notes
Setting Up a Settlement
  • IHT considerations
    • Charge on creation
    • Ongoing IHT charges
  • CGT tie-in
  • Hold-over relief
    • Settlor-interested trusts
      • Exceptions to restrictions on relief
    • Clawback of relief
  • Payment of tax
Administering a Settlement: Exercising Trustees’ Powers
  • The trust property
    • The family business/company
    • Investing the trust fund
    • The standard investment criteria
    • The suitability of an investment
    • The need for diversification
  • Exercising dispositive powers
  • Powers of advancement and to pay or apply capital
    • The statutory power
    • Express powers
    • Meaning of ‘advancement or benefit’
    • Limitations on ‘benefit’
    • ‘Settled advances’
    • Can the trusts created by a settled advance be discretionary?
  • Powers of appointment
    • Distinction between special and general powers
    • The use of special powers
  • Does the exercise of a power result in a new settlement?
    • HMRC interpretation: when is there a resettlement?
    • IHT considerations and planning
  • Illustrations of the use of dispositive powers
  • Challenging the exercise of a dispositive power
  • Hastings-Bass and mistake
    • The facts of Futter and Pitt and decisions of the lower courts
    • What was thought to be the ratio decidendi of Hastings-Bass
    • The correct ratio decidendi of Hastings-Bass
    • When can the exercise by trustees of a dispositive power be set
    • What are the duties of a trustee?
    • Professional advice
    • Void or voidable?
    • When is there ‘inadequate deliberation’
    • The equitable jurisdiction to set aside a voluntary transaction for
    • Gibbon v Mitchell
    • What is a mistake?
    • The correct test for rescission for mistake
    • Mistakes as to tax
  • Powers of appropriation
  • Powers of maintenance
    • Income tax implications
    • Inheritance tax implications
  • Precedents
    • Precedent 20.1: Settled advance not creating a new settlement
    • Precedent 20.2: Exercise of a power of appointment to convert a
      discretionary trust into an interest in possession
    • Precedent 20.3: Exercise of a power of revocation and new
      appointment to change the interest in possession beneficiary
    • Precedent 20.4: Clause exercising a power to apply capital for a
      beneficiary by giving the beneficiary a testamentary general
      power of appointment
    • Precedent 20.5: Resolution to transfer assets to a beneficiary pursuant
      to an express power in the trust deed
    • Precedent 20.6: STEP Investment Policy Statement
    • Precedent 20.7: Standard Provisions of STEP (2nd edn)
The Ending of a Settlement
  • When and how do settlements end?
    • Automatic ending
    • Voluntary termination
  • Formalities on termination
  • Tax consequences of the termination
    • Inheritance tax
    • Capital gains tax
    • SDLT and stamp duty
  • Protection of trustees
  • Precedent
    • Precedent 21.1: Resolution to transfer assets to a beneficiary pursuant to an express power in the trust deed/declaration of bare trust
Multiple (or Pilot) Trusts
  • The uncertain future of pilot trusts
  • Definition: what is a pilot trust?
  • Points of detail in establishing the trust
  • Adding property to the pilot trust before the 2015 changes
  • Checking the settlor’s clock
  • The IHT treatment of pilot trusts
  • IHT consequences of the addition of property
  • Merging pilot trusts
  • The new rules for the taxation of relevant property trusts: same-day
    additions (‘SDA’)
    • The calculation of the 10-year charge
    • Features of SDA
    • Anti-forestalling (protected settlements)
    • Protected settlements and additions by will
    • Implementation
    • Comparison and conclusions
  • Is there still scope for using multiple trusts?
    • First case: create a settlement every 7 years
    • Second case: the same-day addition and related settlement rules do
    • not result in settlements being taxed as one
    • Third case: exploiting the limitations of s 67
    • Fourth case: to hold insurance policies
    • Fifth case: to receive a reversionary interest
  • Does GAAR apply to pilot trusts?
  • Precedent pilot trusts
  • Precedent
    • Precedent 22.1: Pooling agreement for pilot trusts
Trusts for the Disabled
  • A species of vulnerable beneficiary trust
  • Disabled trusts falling within IHTA 1984, s 89
    • Drafting s 89 trusts
    • Meaning of ‘disabled’
    • Definition of ‘mental disorder’
    • A trap
    • The existence of advancement type powers
  • IHT treatment of trusts within s 89
    • The CGT position
  • Types of ‘disabled person’s interest’
  • Income and capital gains treatment of disabled trusts
  • Precedent
    • Precedent 23.1: Disabled Trust
Bare Trusts
  • What is a bare trust?
  • Uses
  • Taxation of a bare trust for a minor
    • Income tax
    • Capital gains tax
    • Inheritance tax
    • Bare trusts and settled advances
    • Approach of HMRC
  • Precedent
    • Precedent 24.1: Declaration of bare trust for a minor

Section IV
The Family

Spouses and Civil Partners
  • Inheritance tax
    • The s 18 exemption
    • Deemed domicile for IHT purposes
    • Gifts to a non-domiciled spouse
      • Linking the limit to the IHT nil rate band
      • The election to be UK domiciled
      • Making the election
      • Time-limits
      • The ‘date specified’
      • When the election ceases to have effect
      • Interaction of the election and the deemed domicile rules
      • The consequences of making the election
    • The related property rules
    • Reservation of benefit
      • The Eversden case
      • Anti-Eversden legislation
      • The anti-Ingram legislation
      • The pre-owned assets income tax charge
    • IHT planning for spouses
    • Business and agricultural property
    • The family debt scheme
      • A spoiler warning
    • The long tail of estate duty
  • Capital gains tax
    • Connected persons
    • No gain no loss disposals
    • Entrepreneurs’ relief
    • Main residence relief
    • Jointly held assets
    • Planning opportunities
  • Income tax
    • Jointly owned property
      • The 50:50 rule
      • When the 50:50 rule does not apply
      • Excluding the rule by declaration
    • Income tax planning opportunities
    • The settlements legislation
      • The width of ‘settlement’
      • Exception for outright gifts
      • The Arctic Systems case
      • Was there a settlement?
      • Was there an outright gift?
  • Impact of GAAR
Children and Remoter Issue
  • Inheritance tax
    • Absolute gifts
    • Settled gifts
  • Capital gains tax
    • Absolute gifts
    • Settled gifts
    • When is hold-over relief not available on settled gifts?
    • Anti-avoidance provisions in relation to main residence relief
    • Minor children and main residence relief
  • Income tax
    • What is a settlement?
    • When is a settlement settlor-interested in relation to children?
    • Parents employing children
  • Trusts for vulnerable beneficiaries
    • What are qualifying trusts?
    • The election for special treatment
    • Form of election
    • Claim must be for both taxes
    • Non-resident beneficiaries
  • Children making provision for aged parents
  • Some tax advantages
  • Some disadvantages
  • Planning required in consequence of the lack of inheritance tax exemption
    • Discretionary trusts
  • Two CGT main residence exemptions available
  • Associated companies
Divorce and Separation
  • Inheritance tax
  • Capital gains tax
    • The main residence
    • Mesher orders
    • Martin orders
    • Outright transfer subject to a charge
    • Orders for the payment of a lump sum under the Matrimonial Causes Act 1973, s 31(7B)
  • Stamp duty land tax and stamp duty
  • Income tax
  • Pensions
    • Pensions Act 1995 and ‘pension attachment’
    • Pension Sharing
  • Life assurance
  • Trust assets as a resource
  • Court’s power to vary an ante- or post-nuptial settlement
    • Assets owned by companies
    • Petrodel in the Supreme Court
    • Offshore trusts
Old Age
  • Reducing inheritance tax
    • Making potentially exempt transfers
    • Making use of exemptions
    • Buying property eligible for business property relief
    • Increasing the value of property eligible for relief
    • Liabilities
    • Agricultural property
    • Terminating life interests
    • Investing in insurance-based products
    • Other tax efficient investments
  • Protecting assets against care home fees
    • Lifetime settlements
    • Insolvency Act 1986, s 423
    • The Derbyshire case
    • Tax implications of transfers to lifetime settlements
    • Problems for advisors
      • SRA Code of Conduct 2011
      • Legal professional privilege
    • ‘Care home wills’
    • Valuation
    • The cap on care costs
    • Daily living costs

Section V
Particular Assets

The Family Home
  • An IHT battleground
  • ‘Safe’ IHT planning
  • The fate of past schemes
  • Ingram schemes
    • Reversionary leases
    • CGT issues
  • Home loan schemes
    • The structure of a typical home loan scheme
    • HMRC’s current attitude to the schemes
    • Practical advice
  • Eversden schemes
    • Tax effects
  • Precedents
    • Precedent 30.1: Licence to occupy between trustees and an interest in possession beneficiary
    • Precedent 30.2: Appointment of nominee and grant of 20-year rent free lease (an ‘Ingram lease’) to him
The CGT Dimension: Main Residence Relief
  • The basic legislation
  • The property must be a residence
  • Effect of periods of absence from the property
  • More than one residence
  • ‘Flipping’ the election
  • Land used with the house
  • Houses held in trust
  • Letting the property
  • Use of a house for a business
  • Second homes
  • Foreign property
  • Non-UK residents owning UK residential property
  • The impact of GAAR
  • IHT planning
    • Ingram schemes
    • Gifts and commercial leaseback: full consideration arrangements
    • Attitude of HMRC
  • Impact of the POAT Regime
  • Other planning options
  • The CGT dimension
    • The £6,000 exemption
    • Chattels comprising a set
    • Use of a trust
    • Wasting assets
    • Machinery
    • Plant
  • Precedents
    • Precedent 32.1: Settled gift of chattels
    • Precedent 32.2: Chattel lease
Businesses and Farms
  • Preliminary matters
  • Succession planning
  • ‘Relevant business property’
    • Improving the level of relief
    • Restriction of the relief: investment businesses
  • The ‘wholly or mainly’ test
    • The Brander case
    • Implications
    • The conacre case
  • Furnished holiday lettings
    • Old HMRC view
    • Current view
    • The Pawson case
    • After Pawson: the Zetland and Best cases
    • The future
  • Property development companies
  • What must be transferred?
  • Excepted assets
    • The Barclays Bank case
  • Meaning of ‘agricultural property’
    • Relief is given on the ‘agricultural value’
  • The ‘character appropriate’ test
    • The Golding case
  • The nexus: ownership or occupation?
    • The Rosser case
    • The Hanson case
  • What is a farmhouse?
    • The McKenna case
  • When is agricultural property ‘occupied for the purpose of agriculture’?
    • The Atkinson case
  • Getting 100 relief on let property
  • The new rules on liabilities
Tax Efficient Investments
  • Personal Equity Plans (PEPs), Tax Exempt Special Savings Accounts (TESSAs) and Save As You Earn (SAYE)
  • ISAs
    • Inheriting ISAs
    • ISAs and pensions compared
  • Child Trust Funds
  • Enterprise Investment Scheme (EIS relief)
    • The shares acquired
      • Who qualifies for relief?
    • Ownership 
    • Employment
    • Which investments qualify?
    • The tax reliefs
  • Venture Capital Trusts
    • Income tax reliefs
    • CGT reliefs
    • Loss of tax reliefs
    • What is a VCT?
  • Pensions
    • Overview of pension rules
      • Pre-April 2011 rules
      • Post-April 2011 rules
    • Position after member’s death
    • Pension benefits after the Taxation of Pensions Act 2014 (‘TOPA 2014’)
      • The changes in outline
      • Taxing the death benefit
      • Who can receive the death benefit?
    • Operating the flexi-access drawdown option
    • Taxing death benefits on the death of a dependant nominee or successor
    • Is it still worth using a spousal by-pass trust?
    • IHT and pension funds
      • The Fryer case
    • Application of the relevant property regime to the pension fund
      • Special IHT rules
      • Lump sum death benefits
    • When the death benefit is settled
  • Spousal by-pass trusts
    • Tax analysis
    • Trusts pursuant to pension rules
    • Impact of the Perpetuities and Accumulations Act 2009
    • Perpetuity issues
    • Solution to perpetuity problem
    • Multiple trusts?
    • Extending the vesting period
Insurance-based Products
  • Qualifying policies and the withdrawal of relief
  • Non-qualifying policies
    • Annual withdrawals
    • Policies held in trust
  • IHT planning
  • Discounted gift plans
    • IHT analysis
    • The Bower Case
    • Taxing the retained fund
    • The POAT dimension
    • Impact of the 2006 legislation
  • Loan trusts
  • Impact of Retail Distribution Review on tax-free withdrawals from investment bonds

Section VI
Planning Using Statutory Exemptions and Reliefs

Joint Ownership of Land: Sharing Arrangements, Let Land and Reversionary Leases
  • Creating joint interests in land
  • GWR and shearing arrangements
  • The Hansard statement
  • Position in the case of gifts after 8 March 1999
  • The basic position (s 102B(1)-(2))
  • When is land ‘occupied’?
  • Taking advantage of s 102B(4)
  • Non-requirements
  • Expenses
  • Occupation by the donee
  • Occupation by the donor
  • How POAT fits in
  • Taking advantage of s 102B(3)(a) – let property
  • Reversionary leases
    • Effect of the 1999 legislation
    • Reversionary leases and let land
  • Impact of GAAR
Gifts for Family Maintenance
  • Overview: the legislation
  • Maintenance of parties to a marriage or civil partnership
    • The Phizackerley case
  • Maintenance, education or training of a child
  • Reasonable provision for care or maintenance of a dependent relative
    • The McKelvey case
  • Is a disabled adult child a dependent relative?
  • Precedent
    • Precedent 37.1: Maintenance and education settlement
Normal Expenditure Out of Income
  • The legislation
  • Case-law
    • The Bennett case
    • The McDowall case
  • When are payments ‘normal’? Establishing a pattern
  • Gifts to pilot settlements
  • Income or capital?
  • Income may lose its income nature: fluctuating income
  • HMRC’s view of McDowall
  • When the normal expenditure exemption does not apply
  • Precedents
    • Precedent 38.1: Record of income and expenditure to determine surplus income (for the purposes of the normal expenditure out of income inheritance tax exemption)
    • Precedent 38.2: Direction to trustees by life tenant as to surplus income (for the purposes of the normal expenditure out of income inheritance tax exemption)
    • Precedent 38.3: Declaration of intent to make regular payments out of income (for the purposes of the normal expenditure out of income inheritance tax exemption)
    • Precedent 38.4: Declaration of intention to pay surplus income into trust for the benefit of a donor’s children and grandchildren (for the purposes of the normal expenditure out of income inheritance tax exemption)
Charitable Giving
  • What is a charity for UK tax purposes?
    • The new conditions for charity reliefs
    • Establishment for charitable purposes only
    • The jurisdiction condition
    • The registration condition
    • The management condition
  • Anti-avoidance: tainted charity donations
    • Types of donation subject to the rules
    • Conditions for donation to be tainted
  • Charitable gifts and inheritance tax
  • Charitable gifts and capital gains tax
  • Reduction in tax when gifts made to the nation
    • The amount of tax relief
    • Limitations
  • Payroll giving
  • Gift aid
    • Conditions for gift aid to apply
    • Charity selling goods on the donor’s behalf
    • Requirement to pay sufficient tax
    • Donor must not receive significant benefits from the charity
    • Relevant value test
    • Aggregate value
    • Particular types of benefit
    • Educational trusts
    • Membership subscriptions
    • Admission fees
    • Charity events
    • Charity auctions
  • Gifts of qualifying investments (‘share aid’) and interests in land (‘land aid’)
    • Qualifying Investments
    • Land
    • Anti-avoidance
  • Post-death variations and gift aid (‘the double dip’)
    • Different treatment for different tax purposes
    • The Harris case
    • Share and land aid
    • Structuring charitable trading

Section VII

Taking Instructions; Identifying Objectives; Finding out Who Owns What
  • An information questionnaire
  • Who is the client? Issues of capacity and undue influence
  • Domicile, residence and foreign property
  • Existing will
  • Existing enduring or lasting power of attorney?
  • Age/state of health
  • Deathbed planning
  • Is there a spouse/civil partner?
  • Finances/property
  • Family/beneficiaries
  • Avoid high-handed tax planning
  • Insuring against the risk of an IHT charge
  • Precedent
    • Precedent 40.1: Taking instructions checklist


The Residential Nil Rate Band (RNRB)
  • The legislation: immediate consequences
  • The amount of the relief
    • The taper restriction
  • What is a ‘qualifying residential interest’?
  • The property must be ‘closely inherited’
    • Discretionary will trusts and post-death arrangements
  • Deceased occupying the property under a trust
  • Lifetime gifts and reservation of benefit
  • Transfer of unused RNRB
  • Differences between the RNRB, the ‘ordinary’ NRB and the transferred NRB
  • How the RNRB is applied in calculating tax on death
  • Practical issues
    • Will drafting
    • Construing a nil rate band legacy
    • Estate planning


"well established work of reference"
Read the full review
Phillip Taylor MBE and Elizabeth Taylor of Richmond Green Chambers

Reviews of the previous edition

"this book emerges as a welcome entrant into the copious body of literature available on tax"
To hear the full review click here
To read the full review click here
Phillip Taylor MBE and Elizabeth Taylor of Richmond Green Chambers

"methodically, yet clearly and with detailed clarity, sets out the law in this ever changing and increasingly complex area...a 'must-have' text and essential as a point of reference (or learning) for a practitioner of any level engaged in advising clients on tax planning."
To read the full review click here
Laura Banks Law Skills
In 2013 it was calculated that it would take 768 hours to read out loud the 13,316 pages of the UK direct tax legislation – ‘just over 19 working weeks or about four and a half months’. Which makes reading a combination of War and Peace and Ulysses a light snack by comparison. Of course this calculation was done a couple of years ago and therefore fails to bring into account the many diversions and pleasures to be found in later Finance Acts. Consider, for instance, the most recent (Finance (No 2) Act 2015) which starts encouragingly with ‘income tax lock’ (section 1) followed, predictably, by ‘VAT lock’ (section 2). By the time section 9 (‘increased nil rate band where home inherited by descendants) is reached the author (aka the draftsman) is well into his stride and there are wondrous things hidden in that section including an interesting excursion into the world of algebra.

The adventurous reader may even stray into secondary legislation, the realm of statutory instruments, which contains a language all of its own. ‘Arrangements are excepted from being prescribed under this legislation if they are specified in regulation 3’ is a typical paragraph that can be pleasantly considered over a stiff drink. If J. Alfred Prufrock measured out his life in coffee spoons the professional advisor is in danger of measuring out his life in fiscal legislation.

All of which provides some justification for a second edition of this book and for its increased length albeit that keeping up with the outpourings of Chancellors and the courts (today every decision seems to get reported somewhere however misconceived it may be!) is something of a losing battle.

In this edition the law is stated at 1 November 2015 but on the horizon is the 2015 Autumn Statement and the promise next year of new rules on the taxation of company dividends and in the following year on domicile and the scope of the IHT. How Palmerston who railed against continual legislation must be turning in his grave!

Apart from thanking (again!) the admirable restraint of our publisher we must especially thank Elouise Dale, secretary/PA extraordinaire, who has retreated from the fray to her native Australia. Their gain is our loss.


Have a question about this product? Please get in touch by completing the boxes below.

You May Also Like

Inheritance Act Claims

Inheritance Act Claims

Law, Practice and Procedure

"a marvellous book to which I will be subscribing and no doubt which will never be on my shelf as...

Available in Lexis®Library
Modern Approach to Wills, Administration and Estate Planning (with Precedents), A

Modern Approach to Wills, Administration and Estate Planning (with Precedents), A

A guide to the tax efficient drafting of wills, administration and estate planning