2019 Loan Charge and APNs

[webberg]

Looks like anyone with a loan balance over £325k is going to face 80% tax on anything over that amount then.

Thats perfectly fair.

Don't forget interest.

[Iliketax]

Looks like anyone with a loan balance over £325k is going to face 80% tax on anything over that amount then.

Thats perfectly fair.

Don't forget interest.

And "failure to correct" penalties...

I must admit I'm confused why you, Calmbeforethestorm, think IHT is as big an issue as you say. Have you taken specific advice based on your own circumstances? In particular, taking account the type of trust it is, the timing of the various transactions, why those transaction occured, the valuation of the loan receivable, etc? If so, what in your circumstances makes it such a big issue? What makes the 45% go up to 80%?

[Calmbeforethestorm]

And "failure to correct" penalties...

I must admit I'm confused why you, Calmbeforethestorm, think IHT is as big an issue as you say. Have you taken specific advice based on your own circumstances? In particular, taking account the type of trust it is, the timing of the various transactions, why those transaction occured, the valuation of the loan receivable, etc? If so, what in your circumstances makes it such a big issue? What makes the 45% go up to 80%?

I have loans in excess of £325k which is the IHT threshold is it not?

if I settle and then have the loans written off then , unless my particular Trust structure falls outside the scope of IHT ( which it may ) then I will face 40% on the income and then 40% IHT on the amount written off over £325k.Will I not?

Happily there is no interest as all the loans predate 2009 but are after 1999.

Did I miss something or am I wrong??

[Iliketax]

I have loans in excess of £325k which is the IHT threshold is it not?

if I settle and then have the loans written off then , unless my particular Trust structure falls outside the scope of IHT ( which it may ) then I will face 40% on the income and then 40% IHT on the amount written off over £325k.Will I not?

Happily there is no interest as all the loans predate 2009 but are after 1999.

Did I miss something or am I wrong??

If the trust is a s86 trust then you are wrong. The rate is not 40% and the IHT threshold is not relevant.

I'm guessing many / most pre-DR employee benefit trusts would be s86 trusts. If you have a copy of the trust deed you may be lucky and find a clause that says something like "The trustee can't do anything to stop s86 applying". Although it might be in more legal-type words that include things like "notwithstanding anything to the contrary express or implied no power or discretion may be exercised by the Trustees so as to prevent this Trust Deed being within the provisions of section 86 IHTA".

[starstruck]

If the trust is a s86 trust then you are wrong. The rate is not 40% and the IHT threshold is not relevant.

I'm guessing many / most pre-DR employee benefit trusts would be s86 trusts. If you have a copy of the trust deed you may be lucky and find a clause that says something like "The trustee can't do anything to stop s86 applying". Although it might be in more legal-type words that include things like "notwithstanding anything to the contrary express or implied no power or discretion may be exercised by the Trustees so as to prevent this Trust Deed being within the provisions of section 86 IHTA".

I have trust deeds but can't see anything like that, any idea what else to look for? Who might I contact to have the deeds looked at? I don't have a clue where to start.

[Calmbeforethestorm]

If the trust is a s86 trust then you are wrong. The rate is not 40% and the IHT threshold is not relevant.

I'm guessing many / most pre-DR employee benefit trusts would be s86 trusts. If you have a copy of the trust deed you may be lucky and find a clause that says something like "The trustee can't do anything to stop s86 applying". Although it might be in more legal-type words that include things like "notwithstanding anything to the contrary express or implied no power or discretion may be exercised by the Trustees so as to prevent this Trust Deed being within the provisions of section 86 IHTA".

What is the IHT rate then?

Anyway my trust is not an EBT, its actually a FURB, now EFRBS.

[Iliketax]

What is the IHT rate then?

Anyway my trust is not an EBT, its actually a FURB, now EFRBS.

A FURBS is a particular type of an EBT and is normally a s86 trust. Rates are in s70(6): https://www.legislation.gov.uk/ukpga/1984/51/section/70

[Iliketax]

I have trust deeds but can't see anything like that, any idea what else to look for? Who might I contact to have the deeds looked at? I don't have a clue where to start.

You'd need to talk to your tax adviser but s86 would be a good place to start - https://www.legislation.gov.uk/ukpga/1984/51/section/86