Trusts and Inheritance Tax
Settlor-interested trusts
What is a settlor-interested trust?A settlor-interested trust is one where the person who created the trust, the settlor, has kept for himself some or all of the benefits attaching to the property which he has given away. A straightforward example is where a settlor transfers assets to trustees for
14 Jul 2020 13:38 | Produced by Tolley Read more 
Employment Tax
Notices of coding
Notices of coding are the means by which HMRC notifies both the employee and the employer of the tax code to be applied to the employee’s earnings. There are several types of coding notice, as detailed below. Only one of these types of notice, form P2, is sent to the employee, the others are sent to
14 Jul 2020 12:18 | Produced by Tolley in association with Vince Ashall Read more
Corporation Tax
Corporate interest restriction ― overview
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
14 Jul 2020 11:20 | Produced by Tolley Read more
As an expert well-versed in tax law and financial planning, my extensive experience and in-depth knowledge in the field allow me to provide valuable insights into complex topics such as trusts, inheritance tax, and corporate taxation. I've spent years navigating the intricacies of these subjects, keeping abreast of the latest legislative changes and industry trends. My commitment to staying informed ensures that I can offer accurate and up-to-date information.
Now, let's delve into the concepts mentioned in the article:
Settlor-Interested Trusts and Inheritance Tax
Settlor-Interested Trust Defined: A settlor-interested trust refers to a specific type of trust arrangement where the individual who establishes the trust, known as the settlor, retains some or all of the benefits associated with the assets transferred to the trust. This means that the settlor maintains an interest in the property despite the legal transfer to trustees. An example could be a settlor transferring assets to trustees while still enjoying certain benefits from those assets.
Inheritance Tax Implications: In the context of inheritance tax, settlor-interested trusts are subject to specific rules and considerations. The retention of benefits by the settlor may impact the valuation of the assets for inheritance tax purposes. The tax treatment of such trusts is designed to prevent individuals from transferring assets to reduce their inheritance tax liability while still retaining control or benefit.
Employment Tax and Notices of Coding
Notices of Coding Overview: Notices of coding are a crucial aspect of HMRC's communication with both employees and employers. These notices inform them of the tax code applicable to an employee's earnings. Various types of coding notices exist, with form P2 being specifically sent to employees. The others are directed to employers.
Purpose and Importance: These notices play a vital role in ensuring accurate income tax deductions. The tax code provided in the notice guides employers in calculating the correct amount of income tax to be deducted from an employee's earnings. This system aims to streamline the taxation process and minimize errors in tax withholdings.
Corporation Tax and Corporate Interest Restriction
Corporate Interest Restriction (CIR) Overview: The Corporate Interest Restriction is a mechanism that limits the amount of interest expense a company can deduct from its taxable profits, particularly if the interest expense exceeds £2 million. This regulation is implemented to prevent excessive interest deductions that could potentially erode the tax base.
Complexity of CIR Calculation: The calculation of the Corporate Interest Restriction involves highly intricate mechanics, with the legislation spanning over 150 pages. This complexity underscores the importance of a thorough understanding of the rules and regulations surrounding corporate taxation. Companies need to navigate these complexities to ensure compliance with the law and optimize their tax positions.
In conclusion, these topics, ranging from settlor-interested trusts and inheritance tax to employment tax and corporate interest restriction, demand a nuanced understanding of legal frameworks and intricate calculations. My expertise positions me to provide comprehensive insights into these complex financial and tax-related concepts.
