How can I gift money without worrying about inheritance tax? And how do gifts affect my Lasting Power of Attorney?

Posted on By admin
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The following gifts may be made without worrying about inheritance tax:

The Annual Exemption, which is currently £3,000 per tax year, per individual donor (not the person receiving the gift, or ‘donee’). If last year’s has not been fully used, any remaining exemption may also be used. For example, a couple that has not used either last or this year’s exemptions, could gift up to £12,000 in total by using four annual exemptions this year.

Small gift – £250 per donee, but they cannot be used in conjunction with the annual exemption and there is no limit to the number of individual donees who can benefit.

Gifts in consideration of marriage/civil partnership – each tax year, the maximums are £5,000 if gifting to a child, £2,500 to a grandchild or great-grandchild and £1,000 to anyone else.

To claim this exemption, the gift must be made on or before the date of marriage or civil partnership and not afterwards. It can be combined with the annual exemption. If the marriage does not take place, the relief is denied and, if not covered by another exemption, the gift is a Potentially Exempt Transfer (PET) and potentially taxable when the donor dies.

Gifts of any amount to a spouse or civil partner.

This is called the ‘spousal exemption’ and any amount may be transferred either during their lifetime or upon death.

Charities – full exemption on lifetime gifts and upon death. Also, the inheritance tax rate reduces to 36% where at least 10% of the net estate is left to a registered charity upon death

Gift Aid – donating through Gift Aid means charities and community amateur sports clubs can claim an extra 25p for every £1 given.

The tax could have been paid on income or capital gains. The charities being supported must be told if you stop paying enough tax. If you pay tax above the basic rate, the difference between the rate you pay, and basic rate may be claimed on your donation. 

Wills and lasting powers of attorney (LPAs)

It is a good idea to consider what your will says before gifting to make sure that the proposed gift does not disturb your intentions upon death.

Having a properly drafted LPA for property and financial affairs, with appropriate preferences and instructions, may allow your attorneys to continue to make payments on your behalf in circumstances where you have lost mental capacity, without first having to obtain an order from the Court of Protection.

Top three tips

  • Take professional advice from a financial planner who is also a registered STEP qualified trust and estate practitioner.
  • Properly consider what you are attempting to achieve because there may be a better way that does not involve gifting.
  • Take a holistic approach and base your decisions on a well thought out and robust financial plan before implementing gifts, particularly where significant amounts are involved.

Robin Melley TEP, Founder and Director, Matrix Capital, Chartered Financial Planners

Are you a client of Universal Wealth Preservation?

Posted on By Joanna Pegum
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STEP has received an unprecedented number of enquiries regarding Mr Steven Long and the companies of which he is a Director, namely Universal Tax Solutions of Dencora House, 34 White House Road, Ipswich, Suffolk, IP1 5LT, which traded as Universal Wealth Preservation. Associated companies include Universal Asset Protection Ltd and Universal Trustees Ltd.

Mr Steven Long, Mrs Melanie Long and Universal Trustees Ltd act as Professional Trustees. Universal assisted clients with drafting and managing trusts, wills and lasting powers of attorney (LPAs), as well as providing secure storage of original documents.

STEP suspended Mr Long’s membership on 1 November 2017, and he was permanently excluded on 5 October 2018, following the completion of the disciplinary investigation into a number of the complaints received.

Universal Asset Protection entered into compulsory liquidation in May 2018, with the business premises of Universal Wealth Preservation having closed several months previously. We do not know nor can we speculate why the business ceased trading.

Clients contacted STEP after they experienced great difficulties in contacting Universal, with no responses to emails, letters or phone calls.

We have been advised by clients that they have been concerned about the management of their trusts, with delays in estate administration and payments from the trusts being made, in addition to being unable to ascertain the whereabouts of their assets, or retrieve original wills and LPAs held in secure storage.

Universal clients now face the realistic prospect that they are unlikely to retrieve original documents or to recover cash assets.

STEP is aware that Suffolk Constabulary is now investigating, and has seized all documents that were held at Dencora House.

We understand from media reports in December 2018 that Steven Long was sentenced to a prison term for contempt of court for refusing to disclose the whereabouts of client assets. This is a civil matter and is not related to the investigation by the Eastern Region Special Operations unit. We understand that criminal investigations are still underway.

In October 2023, we became aware of media reports that two men had been charged by the police in relation to the collapse of Universal Wealth Management.

We understand that Steven Long, 56, of Onehouse, Stowmarket, was charged with three counts of fraud by abuse of position, contrary to section 1-4 of the Fraud Act 2006 and Ray Simpson, 72, of Miranda Do Corvo, Portugal, was charged with one count of the same offence.

Steven Long appeared before Westminster Magistrates’ Court on 8 November where he was charged with three counts of fraud. He did not enter a plea for any of these charges and his case was transferred to the Crown Court. He is due to appear in Southwark Crown Court on 6 December.

Ray Simpson was not able to attend Westminster Magistrate’s Court on November 8 on health grounds. His case was adjourned until 6 December.

What should you do now?

STEP is advising Universal clients to:

  • Seek independent legal advice from an experienced trust and estate practitioner on your options, which may include how to make an application to the courts to replace Mr and Mrs Long/Universal Asset Protection Ltd as trustees, making new wills and LPAs
  • Check whether Lasting or Enduring Powers of Attorney have been registered with the Office of the Public Guardian – call the OPG on 0300 456 0300
  • If not in possession of an original will, make a new one without delay. In situations where someone has already passed away, we understand that Probate Registries are aware of the situation with Universal and registrars will accept a Rule 54 application for a copy of the will to be used. In circumstances where the Universal directors are appointed as executors, registrars will accept a Section 116 application to appoint new executors.
  • Contact the Land Registry to ascertain in whose name your property is registered. Call the Land Registry on 0300 006 0411. We understand that the Land Registry is aware of the issues with Universal.
  • If appropriate, consider whether to make a report to Action Fraud quoting ‘Operation Ardent’
  • Many clients will require Universal Trustees Ltd to sign forms that release them as trustees. In such circumstances, clients’ legal representatives (solicitors and barristers) only can submit a written request for up-to-date contact details to be released to them. Such requests should be made via ardentenquiries@ersou.pnn.police.uk.
  • If concerned by marketing information received or direct approaches from other firms advising you to use their services, consider taking advice from Trading Standards/Citizens Advice Bureau.

STEP has produced an article on what to look for when choosing a trustee.

You can find a full Q&A on Universal here.

If you have any queries, please contact standards@step.org.