Revising your tax affairs today in light of Covid-19 - Spear's Magazine

Revising your tax affairs today in light of Covid-19

Revising your tax affairs today in light of Covid-19

The intensifying coronavirus crisis means HNWs should review their affairs as we approach the end of the tax year, writes Sophie Mazzier

As we watch the Covid-19 outbreak spread across Britain and beyond, and take stock of the volatility of financial markets, there are still not unimportant matters such as the end of the tax year approaching.

You are free to make use of your annual inheritance tax allowance of £3000 (or £6000 if you haven’t used last year’s allowance) by making a gift to a loved one, without risking a charge to capital gains tax which would otherwise arise on the disposal of an asset standing at a gain. And after 6 April, you can do it all again, before the markets recover. This is in addition both to the small gifts allowance of £250 of which one can make an unlimited number, and to the larger nil rate band of £325,000 which is however limited to seven year cycles in any lifetime planning gift-making regime.

For the time being, it is regrettably unlikely that many will be able to take advantage of the gifts in consideration of marriage exemption, but now might be the moment to use the inheritance tax exemption for the reasonable provision of maintenance, whether direct or indirect, of a relative who is incapacitated by age or infirmity of maintaining him or herself. Needless to say, parents and in-laws are always categorised as dependant relatives. So while we are exhorted to refrain from visiting them in person, this is an opportunity to provide financial support at times when extra resources would no doubt be welcome.

Meanwhile, many elderly people who are self-isolating may understandably want to make sure their testamentary affairs are up to date. Many will be aware of the particular formalities with which one must comply to ensure that a will or codicil is validly executed (by the testator in the presence of two adult independent witnesses who must the both sign the will in the presence of the testator and of each other). We have made representations to the Law Society and the Ministry of Justice for guidance or a change in the law to make it easier to execute a will in these circumstances but in the meantime there are ways in which it may be possible to comply with the formalities without putting anyone at risk.

Photo credit: SpencerWing @Pixabay

Sophie Mazzier is counsel at boutique private wealth law firm Maurice Turnor Gardner

 

 

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