Experts Explain Tax Planning for Expats Living Abroad | Andrew Robinson (STS Europe)

“Tax is like a spider’s web... If you pull on one strand, it moves somewhere else.”

Most professionals work incredibly hard to build wealth, but few have a strategy to access it efficiently. In the latest episode of Hoxton Life, Andrew Robinson (Chartered Tax Adviser at STS Europe) explains why tax advice isn't enough if it doesn't align with what you actually want for your family.

We cover:

• The costly mistakes people make before relocating

• Why timing matters more than most realise

• How to structure assets properly before rules change

• What advisers should be doing differently in 2026

Whether you’re advising clients or planning your own cross-border future, this conversation will sharpen your thinking and could potentially save thousands.

Watch the full episode on YouTube, or listen on Apple Podcasts or Spotify.

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Transcript

Meet Andrew And His Tax World

SPEAKER_01 0:00

What the tax changes have done is encouraged spending rather than saving. But what we need to plan is how we're gonna get it out during retirement age. To start with yesterday. Yeah, and the second best time is today. Five tax is like a spider's web. Where if you pull on one strand, it moves somewhere else. So it's important to get the right advice. There's an old saying the first generation make it, the second generation grow it, and the third generation spend it.

SPEAKER_02 0:25

You can try and get taxed down as low as possible. But realistically, if it's not viable for you and your family, then they're gonna take up the planning opportunity anyway.

SPEAKER_01 0:34

I think that that's the difference between sort of just just giving the client tax advice and actually giving them what they want.

SPEAKER_02 0:46

Thanks very much for joining us, Andrew, today. Really appreciate you making the time to come in down. So, first off, why don't we kick off with a little bit about you and your background uh and your business and how you uh helping uh helping people?

SPEAKER_01 1:00

Okay, great. Um, yeah, thank you for having me. Um it's great to talk about this. It's a very uh sort of typical position, particularly for um business owners at the moment. Um I'm a chartered tax advisor by trade. I went through my exams, spent three years with my head in tax books, which I know everyone would probably be jealous of and wish they could do. Um, but yeah, and then sort of from the work we do, we deal with high net worth individuals, ultra-high net worths, particularly with a non-dom aspect, which is a concept that has gone out of the legislation from April. Um so we deal a lot with structuring around trusts, inheritance tax, which obviously no one likes to pay because it's seen as a double tax. But yeah, we work along complex cases, maybe people looking to come to the UK to structure their affairs, people looking to go move out of the UK and how that goes. So we deal a lot with sort of the Isle of Man, Jersey, Guernsey, those Channel Islands, and then Switzerland and Liechtenstein as well. We do quite a bit of work with.

SPEAKER_02 1:59

Nice. So you're uh busy flying around and with the ever-evolving tax legislation, there's never a dough there.

SPEAKER_01 2:06

Yeah, absolutely. Every every every client's different, particularly um where it's coming through. And there's historic with the changes in in tax legislation. This historic structures maybe don't work under current legislation, so it's reorganizing them, making sure that it fits with today's sort of tax legislation and things they're looking to introduce the anti-avoidance and and making sure everything going forward suits what the client needs.

SPEAKER_02 2:32

So obviously there's been a lot of changes, as we know, brought in by the current administration government, um, that you know, that have

What Changed: Pensions And IHT

SPEAKER_02 2:40

been uh, let's say, not as popular um as maybe they would have hoped, or maybe they did know that they weren't gonna go down too well. Um, in particular, one of the ones that strikes me, and one of the ones that we deal a lot with our clients on is pensions. Yeah. And this isn't, you know, typically for people that are going to use all of their pensions in their lifetime. This is for people that were using their pensions to help shield against inheritance tax, because as we all know, pensions were outside the scope of inheritance tax for years and years and years. And then obviously they've been now bought in. And some people have, you know, a couple of million, such as we've seen 20, 30 million pounds being sheltered in pensions, SASEs, sips, um, CUNUPs, Cure ops, all of these kind of great vehicles that people are using. But now that's no longer available, and that presents uh an issue because there's limited things that you can do to start uh drawing out from it, I suppose, um, unless you want to pay a load of income tax now, um, which again the whole purpose of the utilise those vehicles was to was to lower tax. So what what are people doing? What what are you seeing? How are people looking to to to address this?

SPEAKER_01 3:47

Well, the first thing to know is that it's under consultation at the moment um till 2027, that's when it's due to kick in. And and going back to your point, I think it'll be interesting that consultation, because potentially there's a double tax there in terms of those that uh are passing it on and inheriting inheriting those pensions, are they going to pay income tax on the way out? So potentially there's an effective rate of 67% for people.

SPEAKER_02 4:14

That's the one we've seen banded around in papers, and you've seen you know you lose 67%. And you know, I even I've had lots of questions from clients personally as well on that as well. Yeah, and it is a concern. I mean, you know, if you die pre pre-75 at the moment, no income tax, post-75, income tax, but you can kind of stomach that a little bit and you can manage and plan around it.

SPEAKER_01 4:34

Yeah.

SPEAKER_02 4:35

But potentially 67% is not not an easy pill to swallow.

SPEAKER_01 4:39

No, it's not ideal at all, especially when you've worked hard to save that money and and really provide for for your future family. Yeah. Um, I think I think it is a bitter pill to swallow. Um, and from probably from your perspective, I think it's quite hard because normally what would be your pension would be the last thing to draw on when your savings and everything. And and now it's probably one of the first things because of that 67%. Yeah. So really it's about how people utilize their pensions, their SIPs, and everything, and and how they draw down on that during the lifetime and what else they have around it. I think obviously ISIS will become more important in terms of the utilising your an annual allowance each year.

SPEAKER_00 5:20

Yeah.

SPEAKER_01 5:21

Um, but also it's drawing down and making sure you don't have that significant because pensions are hard to get out of. Um, and depending on what comes from the consultation is is how we're going to treat that and probably drawing down. Obviously, you've got your lump sum sort of to begin with, and and getting that out of there as as quickly as possible to reduce it um early. Yeah. Um, and then spending what what the tax changes have done is encourage spending rather than saving. Yeah. Whether that's a good thing or not, um, we'll only tell when people maybe become more dependent on the government and because they've spent all the money. So it's probably more from a we're looking at different structures for long-term planning now rather than creating your SIPs and and sort of putting money in there. But also, it is quite an effective position from reducing your corporation tax for owner-managed businesses as well each year. I mean, the annual allowance at £60,000, you can reduce your corporation tax significantly each year. So it's still quite a useful tool. Yeah. But what we need to plan is how we're going to get it out during retirement age, and also what potential changes

The 67 Percent Scare And Drawdowns

SPEAKER_01 6:30

could come in if this if Labour stays in. Yeah. Are the pension sort of position going to stay, or do conservatives come in and sort of reverse that? So there's still quite unknown exactly how it's going to work, because we do have till 2027 for it to be introduced. But the consultation will be key on on sort of planning opportunities. But right now, probably the key thing is the pension's the first thing to draw down on because of that inheritance tax position.

SPEAKER_02 6:58

Yeah, yeah, it's an interesting one, isn't it? We've definitely been uh advising people to use at least up to their basic rate. Yeah, uh allowances for for you know spouses uh as well, uh as as well as himself. Um, but it's yeah, it's frustrating because obviously you see these, you know, you plan one way and they and that can happen. But I suppose that's that's the nature of the beast as well, isn't it?

SPEAKER_01 7:21

It is, and and this is key in sort of when you're talking to um business owners is being flexible, yeah. Not to having not having too rigid of a of a structure that that can't be reversed if tax changes or there's gonna be a lot more anti-avoidance coming in. I think don't forget we've probably still got four more budgets under Labour. Yeah. And trying to get the tax receipts and and sort of putting anti-avoidance in. They've already said they're gonna attack that sort of offshore market and avoidance. So making sure you're flexible. So if something does come in, it's not gonna create a big tax liability just just by altering it.

SPEAKER_02 7:57

Yeah. No, definitely. And it's interesting as well what you were saying, because obviously pensions have been good or are great still for helping you reduce your current income tax, helping you reduce uh corporation tax for the assets growing tax-free when they're in the wrapper. There's still a lot of uses for these vehicles.

SPEAKER_01 8:16

Yeah, absolutely. In terms of growing wealth, um, I mean, if you're paying 45%, you don't want to pay that annually. So who knows? When you retire, you might not be earning that much. And as as you mentioned before, you might just be a basic rate taxpayer and and utilising that it can be quite beneficial, providing you're making sure that you're not paying 40% on. So maybe it is is drawing out sufficient planning correctly. So maybe you take out up to a hundred grand each year when you retire, and maybe the net effect is is better than paying forty percent on just leaving it in your pension. Yeah. So there's gonna be a not a lot of analysis, and each client will be different depending on how much they have in their pension and how much they want to draw and live off. Yeah. Um, yeah, so there's also the the ability to draw down and gift cash to to children to reduce your estate that way. Um but there's a very interesting piece, isn't it? Yeah, it is. It is because cash cash is easy to give. As long as you survive seven years, then then you're in a good way. Obviously, there's the tax coming out, but yeah, you've got you've got to weigh it up in terms of what the net tax and effective rate is, as we mentioned before, potentially 67% for those additional rate taxpayers. Yeah. Well, are we better drawing down and gifting that during our lifetime and and paying income tax on that? Yeah. Or do we just want to leave it in and maybe our children aren't additional rate taxpayers or basic rate taxpayers, so that effective rate is a bit less.

SPEAKER_02 9:48

Yeah. And the other thing, like you said, I mean, look, ultimately at the moment, if someone was to pass up to the age, it depends obviously how big the asset is, but still up until the age of 75, there wouldn't be that additional tax uh as it stands at the moment. But I think the key message there is that we are in a consultation phase and there's a lot that can change. And also if the government was to change, that could be uh that could be an easy one for them to reverse.

SPEAKER_01 10:13

Yeah, it could be it could be uh an easy one to reverse, and and then the tax planning goes in, sort of changes

Spend Versus Save And ISA Strategy

SPEAKER_01 10:20

again. Um so yeah, it it all just says, but people are living older, so it it is more favourable, but then who knows what what happens in this day and age. It's it's a crazy world we live in, so who knows how long we we're going to last. People are flying more, people are traveling more, um, and with that obviously come comes dangers. Um whilst whilst we are, everything is safe, but you don't know what's gonna happen when you walk around the corner or across the road.

SPEAKER_02 10:50

Yeah, it's very difficult, isn't it? And I suppose that's the importance of planning early, as opposed to taking, you know, as opposed to uh believing that you could kind of live forever. I mean we've seen some really sad situations where people have got the best intentions in the world, but it's always tomorrow, tomorrow, tomorrow. And actually, with most types of planning, tax planning or financial planning, the best time to start was yesterday. Yeah, and the second best time is today.

SPEAKER_01 11:17

Yeah, absolutely. I mean, financial planning is is an aspect of it. I I say this all the time to business owners, you've got like power of attorneys and wills in place, like you you need to get those. The basics yeah, power of attorneys are essential for business owners. Like you don't know what's going to happen or anything. And the last thing you want, if you're 50% shareholder with your wife, and all of a sudden one of you doesn't have the mental capacity to do things, and you don't have that power of attorney, it can really, from a tax perspective, really affect you because then you're paying dividends out to their estate, which is controlled by the courts, and as a family, you can't attract that. So there's many aspects as well from a financial and legal perspective to for business owners to consider. And yeah, tax has a touch point on all of that, so they need to be aware of it.

SPEAKER_02 12:06

And what what other things have you been looking at for people with businesses? Uh obviously talked about uh well, we keep relating back to business owners, uh and so that's obviously a uh you know a big subsect of your client bank that you would work with entrepreneurs. So, what things have they been doing recently in terms of inheritance tax, like let's say pensions are now scrapped, yeah, or that could be off the table.

SPEAKER_01 12:29

Yeah.

SPEAKER_02 12:29

Um, what other things are they looking at?

SPEAKER_01 12:32

Um, a lot of things are annuities, you can put things into annuities, but also maybe offshore trust. I think family investment companies are uh are really growing and they'll become particularly offshore stuff. And again, it goes back to the plan. I like to work on sort of a short-term, medium-term, and long-term plan. Um, because if their plan is to stay in the UK, what we plan would be totally different for someone who may go offshore in the future and because they're gonna be within the scope. Now, one of the benefits of the the legislation that came up actually was people like me who's a domiciled UK individual, I can actually now, probably for the first time in a while, get outside of the UK IHT by going offshore for 10 years. Now, if I'm planning on doing that, it's creating and I've got international business or stuff. Obviously, considering anti-avoidance, we can set up an offshore structure that I can run international business through, make sure the substance. Island Man's a very good one for people in the north. Yeah. Um, and then my plan in the future, if I want to sell the business, I can go offshore. There's temporary and non-residence rules where I've got to be away for

Flexibility Under Shifting Governments

SPEAKER_01 13:45

five years that we need to consider. But actually, there's a lot of business owners looking for the future and actually where am I going to be when I come to sell that business?

SPEAKER_00 13:55

Yeah.

SPEAKER_01 13:56

And it you can take completely out of the scope UK tax if you plan correctly. And from an inheritance tax perspective, saving that 40% by going away for 10 years. And when we say we go outside of the UK, it's not you have to stay in one place for for 10 years. Yeah. You can move around. Um, which which some business owners are looking at, they're already structuring where they've got international business maybe demerging sort of that side of the business and and put it offshore, but you've got to be very careful. Um, I like to describe taxes like a spider's web, where if you pull on one strand, it moves somewhere else. So it's important to get the right advice um so that you're not being tripped up by any anti-avoidance. Yeah. And then the other side is people are creating generational wealth. Yeah. And it's not just protection for them, it's protection for their children. The last thing they want to do is build a a huge business and then HMRC take potentially 40%. Because as we know, the business property relief rules are changing as well. So entrepreneurs are building multi-million pound companies, and previously where they would be out of the scope and the family businesses in particular would be passed down to children, all of a sudden they have an issue around inheritance tax, and it's whether the business can pay for there's enough funds in the business to pay for that inheritance tax for the children to inherit or not. So we're looking at a lot of things maybe around trusts, um, onshore and offshore, and that just provides the scope. And the other side is the asset protection from from divorce. Yeah. I think in the in the UK it's one in two or around that at the moment. And it's not generally the people generating the wealth, it's who are the kids marrying. Yeah. Because divorce divorce is a lot more common now, and marriage probably doesn't have the value that it held in that older generation.

SPEAKER_02 15:52

If you're trying to gift it earlier as well, so you're trying to pass these assets on during your lifetime as opposed to waiting to death, which is you know a sensible way of doing this. Yeah. It's how do you protect against that possibly now? Because that's you know, again, like you said, it's it's not necessarily you that you uh are concerned about. We I was talking about this with our uh trust and will um expert he's based at in the UAE, and he, you know, one of the one of the areas that we were talking about was when you get remarried, obviously. So, you know, wife uh has a has an extremely uh great business, um passes away unfortunately, husband inherits that, then gets remarried. You know, their natural plan was to have it to go to the kids, but actually it then ends up, you know, the wealth ends up cutting onto a new wife. Yeah. That's not a place that you that you would uh that you would want to be, but utilising things like trust structures can help against that. So it's not just negating inheritance tax, no, it's actually making sure that the assets flow down the bloodline.

SPEAKER_01 16:54

Yeah, absolutely. And and tax is a driver on things, but it's not the only driver.

Lifetime Gifting And Seven-Year Rule

SPEAKER_01 17:00

One is asset protection, as we mentioned, which comes from a legal standpoint. Um, I think that that probably took more influence before the budget. I think asset protection was a big thing and tax kind of came and you can make it tax-efficient structure, but probably after the budget, a lot of people, especially around inheritance taxes, the needles probably come back sort of more neutral and it's important. And from that, it's not just making sure those assets stand still, it's people like yourselves that come in and then grow that wealth as well. And so, probably between the legal standpoint, tax advisory and and wealth management, there's a strong sort of three-pronged area that clients need to look at there to make sure one, their assets are growing, two, they're being effectively tax efficient, and then three, they're protected if if they're creating that generational wealth and they want to pass it on to the children.

SPEAKER_02 17:55

Yeah, definitely. And you mentioned that, you know, an interesting point, a lot of people um were pre-budget, probably focused on asset protection. And then obviously a lot of tax um issues have been thrown in. So we're actually starting to see people now, you know, and as you were saying, you know, you once you live outside the UK for 10 years, inheritance tax doesn't matter. So they're going, Do you know what? I'm gonna leave. Yeah. Um but making sure that you leave well and structure it properly is is super key. Like, you know, you should be planning well before you leave rather than leaving and then trying to figure out what what you do. So like what walk me through some high-level steps that you would advise people first off to consider if they're looking to leave um with businesses or with assets or you know, or you know, substantial wealth. Um and then you know, high level what you'd be looking at with them.

SPEAKER_01 18:47

Yeah, I mean, a lot of it is if if you're going to pass it down to your children, you know, we're looking at and you probably don't trust children with the cash. I mean, some people inherit multi-million pound business, and there's an old saying, the first generation make it, the second generation grow it, and the third generation spend it. So you're protecting around that. So if it's a multinational business, does it all need to be through the UK? Um, so we're looking at maybe setting up a an offshore holding company. And if you're looking to expand, particularly through Europe or or go offshore, um, we're setting that holding company with an underlying trading company um to sort of filter that that international business through. Obviously, we've got to consider the anti-avoidance, like control and management, yeah, um, and also transfer of assets abroad legislation. So there's things that can can trip you up. But if you do it effectively, what you can do, and your plan is to go um offshore in the future, potentially that's tax efficient because non-residents don't pay tax on UK um UK capital gains. So you're fine from that aspect. So it is a three to five year plan. On the flip side, if you're looking to stay in the UK, the personal investment company comes really, really, really useful. So, what is that? Um, so you're setting

Plan Early: Wills And Powers Of Attorney

SPEAKER_01 20:10

up a corporate entity essentially, and you can either loan funds into there, um, so people like yourself can then just do corporate investments. So rather than the income being being grown and sort of taxed on yourself is is taxed on the company at corporation tax rates. So you get the benefits of the dividends, you get the the capital gains taxed at 25% if you're earning that much profits, or rather than 24%, or if you're not earning that much profit, is obviously a lower rate. Um and then also what you can do the loaning in there, you can withdraw and and reclaim that um the repayment on that loan tax-free. So you're not having to take dividends out, which from a tax-efficient perspective is really good. Yeah. On the flip side, you can create substantial shareholdings exemptions by creating that holding company and the holding company selling the selling the property as a the the business as a trading business. So there's no tax to pay until you draw it out of the holding company. Yeah. So there's an opportunity there. And then in the future, from an IHT perspective, you can maybe gift the shares down over a period of time. Yeah. And there's capital gains tax to consider on that. So phasing that over a period, um, and also making sure that you've got those seven years to survive, so you're not so you're not paying inheritance tax on a lot of people looking towards that. Yeah. Um interesting. Yeah. So if you have a structure structured correctly, you probably don't need to take funds out of the corporate structure to increase your personal tax liability. You can do sort of dividend up to a holding company, sort of loan it down to to investment companies or or buy commercial properties within within a company. So there's lots of aspects that people Can look at. Yeah. Especially, but there's probably a three to five year plan in making sure the structure is is correct and making sure that tax efficient and as well as being adaptable for any tax legislation changes that come in.

SPEAKER_02 22:14

Rather than I've sold my business, what should I do?

SPEAKER_01 22:16

Yeah, exactly. Yeah, because if yeah, if you come in after you've done something, you're you're taxed, yeah, you're you're late on the tax. So I mean one of the big points is business asset disposal relief that's being reduced significantly. Now, whether that's a plan to phase it out, whereas then you're not really getting tax relief on selling your business. So you've got to look more carefully at how you're structuring the business to when you come to sell it and you're making a massive gain. Because most most people sort of capitalise a business and it's one pound share when you create it, and then it's pure profit when when you sell it. So how do we structure that correctly for your plans in the future? Are you going to go offshore? Um what's your business like? What what are your plans for that business? Because then through each phase of an entrepreneur, as I'm sure you see, you probably get a client that comes and and they're only, you know, we can put 10 grand in to begin with, but then over years it grows and you see the potential. So it's making sure the structure is correct at the start of a business rather than at the end when you're coming to sell it. Because a lot of the legislations and the the reliefs that you can get do require a minimum period,

Offshore Options And IHT Non-Exposure

SPEAKER_01 23:30

normally 24 months, um, some are 12 months. But you've got to make sure that you can fulfil that rather than coming. I'm selling my business next week across the more.

SPEAKER_02 23:39

Yes. What's the most tax basic thing I can do? Well, not a lot, yeah, Wynn.

SPEAKER_01 23:43

Absolutely.

SPEAKER_02 23:43

And I think that's it. It's it's again, like we said, it's taking these things seriously before because you never know what offers around the corner if you've got a successful business, and you might want to take that. You never know, um, you never know what's around the corner for your business. Um, it could, you know, really take off without you expecting it, and then you're much more in the business. So taking this stuff seriously earlier on is definitely, definitely worthwhile. And spending a bit of time and a bit of money um on taking professional advice because the other thing that you see is people DIY it. Yeah. Try and watch a few YouTube videos, or they try and read a book, and then all of a sudden, you know, they're an expert. You were saying, you know, you're you're a sharp tax advisor. Um, and you know, we would always encourage our clients to work with experts in their fields and pay for the advice because you get quality advice out of the back of it.

SPEAKER_01 24:34

Yeah, absolutely. And and it's the same with me. I'm a tax advisor, I'm not not an accountant now. You stick I can read accounts, but putting them together, like everything's back to front to me. So like even though we're in sort of the same sort of environment and sector, like there are different roles, and through tax, there's different types of tax advisors, there's corporation tax advisors, there's VAT uh tax advisors who I don't envy at all. But but yeah, so going to specific and making sure that people have the right skills in order to achieve what you're looking for is important and it will save you a lot more money compared to in the future if hate you get something wrong and HMRC identify that and potentially there's penalties there or interest, potentially it could cost you a lot more than actually paying for that advice up front. Yeah. Um, and they've got the best interests. And from my perspective, I'm there for a journey, I'm not there for a one-off advice piece. And as your business changes, it's important that um the tax advice suits your needs because people have different changes, like a business owner, husband or wife, whether it's male or female, what might happen is they have one idea and they would like to do something to make it tax efficient, but then family prevents them from doing it. Yeah. So it's important to understand whilst the tax position is correct, it's important to understand actually what they want because sometimes it's worth paying a bit more tax to give them what they want and make sure their families, rather than just paying the the minimum amount of tax.

SPEAKER_02 26:12

Because that means ultimately it gets done, like you said. It's one thing paying the tax, it's another thing. Um, you you can try and get tax down as low as possible, but realistically, if it's not viable for you and your family, you're never going to take up the planning opportunity anyway.

SPEAKER_01 26:28

No, no, absolutely not. And and you can pay no you can get away with paying very minimal tax, but you might not be able to enjoy the fruits of your labour. Yeah. Like, and and this is where what we've we focus on is is people who generate businesses. It's how do we get the money into their back pocket tax efficiently so that they can do what they want from life. What was your goal when you set out this company, set up this company? What what did you want to achieve? Well, we can do that. This is the tax consequence. We can mitigate it by this, this, and this. But you're being able to do what you wanted out of when you first started and those early mornings, long days trying

Generational Wealth, Trusts, And Divorce

SPEAKER_01 27:10

to generate business. This is what you wanted. And and sometimes it's okay to pay the tax. It's just not what we don't want is you're paying more tax than what you have to.

SPEAKER_02 27:19

Exactly.

SPEAKER_01 27:19

Yeah.

SPEAKER_02 27:20

And that's it, it's it's tough, isn't it? Yeah. I think look, I think one of the things as well that people are really interested in is property. Um so property is a big one, and and people have built up substantial property portfolios over the years. Maybe um they're not worth as much as they would have hoped at the moment, given with what's happening in in the wider economy. Um and one of their you know, aspirations is to pass these assets down onto their onto their children. And we've obviously seen a big I said lurch is probably the wrong way, but the wrong word, but we've seen a big swing into using limited companies. Uh I was I read a book recently actually on uh family investment partnerships, yeah. Um LLPs, um limited liability partnerships, which which was actually really eye-opening as well. Yeah. Um you know, what what should people be considering and when is the right time to you know start considering uh whether you should look to put your uh properties into a limited company? Because you know, some people have one or two, but then you know, there's quite a few people that we would have as clients that might have 20 plus. Yeah. Um so you know, what what when would you start to say it becomes viable, I suppose, is is the real question. And what should people start to look for?

SPEAKER_01 28:35

Yeah, I think I think it depends on your circumstances. If you're sort of just a basic rate taxpayer, you kind of look around, well, I'm paying 20%. So really the cost of having a company and everything doesn't really warrant it. But if you're an additional tax rate payer, all of a sudden that's that's quite significant. Um and also there has been a lot of changes around UK land and property in in sort of the last five, 10 years because people were putting them in companies or putting them offshore and getting tax advantages there. So HMRC have clamped down on it a lot, um, particularly if you've got a company that derives more than 75% of its value from UK land and property. Now, if you sell those shares, that becomes taxable as well. So they are clamping down on it. But in terms of making it viable and putting it into a company, if you're renting it out, you're probably looking around the three mark, three three properties, I say. But if you're an additional rate taxpayer, you might just want to start that off and then you're generating those, generating the income and everything within the corporate structure, and then you can reinvest that and get everything through there. Um, so yeah, I'd I'd probably say if you're a basic rate taxpayer, probably about three. If you're an additional rate taxpayer and you're you're gonna grow, um, yeah, you're probably looking more towards sort of getting it in there straight away because the likelihood's they're gonna build a portfolio. Um one of the problems is there from from a property and and company perspective is is the inheritance tax position and and how do we get around that? Uh, because that there's a business where it develops uh commercial property or it it just hours uh it it rents them out. Now all of a sudden, because it's dealing in UK land, you can't get that business property relief on there. So you've got a massive inheritance tax position. So how do we structure that and and make sure that that's out of out of ever um the scope of UK inheritance tax? Because even just going offshore for 10 years, it doesn't work because the sites UK side usets.

SPEAKER_02 30:46

Which is people don't realise now they do believe I'm not I'm not there anymore. But yeah, even if you were never ever living in the UK and you have those assets, they would still be subject to UK inheritance tax.

SPEAKER_01 30:58

Yeah, absolutely, which is where we

Leaving The UK: Holding Companies And Timing

SPEAKER_01 31:00

consider sort of the position in terms of the inheritance taxes, making sure things aren't UK based. Yeah. Um, and the structures outside of the UK that are are valid on that. But from a UK property perspective, yes, it's great sort of building it and and whilst your lifetime is producing a good income and and you're you're drawing down on dividends, or if you've initially loaned that first deposit amount, you can you can draw down on that. Um but actually it's going to leave you with quite a big inheritance tax. And this is where the the planning position comes in and and making sure that we're utilising we're we're gifting shares to children or maybe putting them in trusts if we want to for our children later on, if we've got a big portfolio early enough so that that seven-year goes and we're not paying 40% tax on that. There's obviously capital gains tax to consider as well. So there can be a big, big trip up there, but if you've got them in your own name, you're paying the income tax uh 45% as an additional rate taxpayer. So you it's all swings and roundabouts, and this goes back to where I was saying before is tax is like a spider's web, we've got to consider all aspects and and actually as you'll understand from financial position and and monitoring everything, actually, what is most tax efficient or what what ends up with more cash in my back pocket by doing it? Is it a company or is it keeping them in my own name or putting them in my spouse's name, which then comes back to sort of the divorce position that we saw. So it's important to have a think tank, I think, of and people talking together, like me as a tax advisor, you as a sub-wealth manager and a lawyer, and and how we can protect assets but make it tax efficient.

SPEAKER_02 32:46

And that that was kind of leading me on to my next question, which was wealth uh wealth managers, financial planners, uh like us at Hoxton Wealth, how does a good tax advisor work? Because again, we have people that come to us and they will typically come to us for financial planning. Um, if they have uh tax needs and uh issues, we would then look to work with the right people, such as yourself, yeah, and bring them in. How do you how do you work with uh you know, how do you work alongside us in those kind of relationships?

SPEAKER_01 33:17

Well, communication is key. One is obviously you know a lot more in terms of investments and and how they work and what's achievable from that, and I'll I'll say, well, the tax consequences are this. So it's more not I'll work with the client and these are the tax and you have to do that. It's like, well, what's best, what's going to produce some more returns on that side. So I think it's understanding the client, is going to them and speaking to them. Each client has different needs. Each if they're married, their spouse has a different need, so it's usually needs to considering, um, particularly if they're a business owner. Um, because whilst they might be happy going offshore, the their spouse might have grandchildren and and everything and want to stay here and be quite homebed. So that needs factoring.

Personal Investment Companies Explained

SPEAKER_01 34:05

So I think it's it's communication and and talking to the client. Look, these are your options. I think it's hard to go to a client and say, look, you need to do this, this, and this. What the best option, what the best way to operate, I feel, is is education and saying, Look, you've told me that this is what you wanted. Um your your spouse, your family would prefer this. So these are your options. If you do option A, these are the consequences, these are the tax, but that gives you what you want. Alternatively, we can be more aggressive. It doesn't quite give you what you want, but you're going to save this much in tax. Yeah. So I think a lot of it is educational based. Um it is sort of giving them the tools and the opinions, giving them the options of what they can achieve, and then delving into that a bit more detail. Um because tax is very complex. So I mean, if you look at the tax legislation, it's insane the way it's written. So it's about communicating, transferring that tax legislation into something that the client can understand and is aware. Because at the end of the day, it's their decision of what they want to do, but they need to, and it's my job to translate what the tax legislation says to them so that they can understand all the all the positions.

SPEAKER_02 35:23

It's a joined up approach, isn't it? I think between us, and that's that's how we try and work. It's that we will look to pair people up with the right advisor, be that legal, be that tax, um, you know, for it for their particular situation and for um for who they are. But then it's not kind of well, you deal with them and then you know we'll just come in. It's very much working together to make sure that it is a joined up bespoke service that is unique to them. We are addressing their concerns, yeah. Um, and they get the best possible advice that they can, which I think is always difficult because we live in an age of so much information and there's so much, you know, that you can you can go down rabbit holes quite easily once and you can normally come to the wrong conclusion unless you bought in an expert.

SPEAKER_01 36:07

Yeah.

SPEAKER_02 36:07

Um and that's you know, that that's really what we try and make sure that we do with our clients is to give them the best possible service. You know, and it's uh I call it friction, but it's creating as less friction as possible for them. So they shouldn't be difficult, they shouldn't feel like they're dealing with 20 different people, and this is an absolute nightmare or noise. Yeah. Uh you know, this is this is all joined up, and I can definitely see the value of it. It's that, you know, it's but peop people who are busy because they have created a lot of um a lot of monetary success. Um typically time is really important, and being able to deal with people that are that that that are uh best in their field and that can help is super important.

SPEAKER_01 36:52

Yeah, absolutely. I think uh yeah, clients want to see their business valued by the expert that's giving them the advice. Yeah.

Pre-Sale Structuring And Relief Windows

SPEAKER_01 37:00

Like they've worked hard, and it doesn't matter whether it's a a small business or or a large business, they're probably they've all worked equally as hard and feel as proud as that as that business, and they they need to feel that from the expert, which is why understanding them from any point, understanding the client is the first protocol and what they're trying to achieve. It's not you're trying to shoehorn them into sort of a a template that you've done before for other businesses. While some things are similar, each each structure that I work on has a nuance that's specific for that client. And I think that's that's the difference between sort of just just giving the client tax advice and actually giving them what they want.

SPEAKER_02 37:44

Yeah, they're definitely.

SPEAKER_01 37:45

Yeah.

SPEAKER_02 37:46

That's been really good. Andrew, I really appreciate you making the time and coming down and having a chat with us. Um, yeah, thanks very much. And uh I hope you guys found it useful. Uh and if you've got any questions, obviously please don't hesitate to get in contact with us and what we can obviously bring Andrew in to assist. Um and yeah, hope you found that useful.

SPEAKER_01 38:06

Thank you for your time. Thanks, guess.