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Expat Investor : September 2007
NEWS expatinvestor.com 2 EXPAT INVESTOR Sepember 2007 Expats in Spain and France must plan for IHT laws Fast Facts 77110 Fast Facts 77112 CONFUSION surrounding inheritance tax (IHT) rules in France and Spain could disadvantage thousands of expatriate Britons living in these popular retirement destinations, warns IHT planning specialist WAY Group. As the number of Britons taking up residence in Spain and France soared to a total of 961,000 by the end of 2006, the Way Group reported a "significant" rise in enquiries from expats concerned by highly complex taxation laws in both France and Spain, especially for Brits who are non-domiciled -- that is, living permanently in either of these countries. "Up until quite recently we had little or no enquiries on the IHT abroad issue but IFAs are increasingly being asked to restructure clients' affairs ahead of emigration to the sun," said WAY Group chairman Paul Wilcox. A key fact which Britons retiring to live in France need to be aware of is that there is no exemption beyond the 76,000 personal allowance on transfers between husbands and wives on death. "Clearly, in the case of better-off expats, this relatively frugal allowance means that many Brits will be vulnerable -- and if assets go directly to the children, each child LLOYDS TSB has launched a service designed to take the hassle out of completing tax returns. Available online, over the phone and by mail, the service includes a review of a customer's individual tax Lloyds TSB makes tax returns less taxing Nationwide International launches Base Rate Tracker Account NATIONWIDE International has launched a Base Rate Tracker Premium offshore savings account paying up to 6.00% gross p.a./AER. Nationwide International describes the new account's attractions as follows: flexibility with instant access -- four penalty free withdrawals of any amount each financial year. competitive interest rates -- paying up to 6.00% (annual or deferred interest) and up to 5.80% (monthly interest). rate guarantees. With annual interest, the account guarantees to match or beat the Bank of England base rate for the first year. Thereafter, the rate is guaranteed to pay 0.25% below base rate until 1 January 2010. With monthly interest, the account guarantees to pay no less than 0.20% below base rate for the first year. only has a personal allowance of 50,000," says Mr Wilcox. "Then tax from 5% up to 40% will be levied -- and many Brits are unaware of the fact that the kids actually have more rights than the spouse under French law. Unmarried Brits who live together are also very exposed -- as the Fr ench will hammer you for 60%." Mr Wilcox points out that the Fr ench tax authorities have a system known as assurances-vie, which will allow unlimited amounts to be sheltered from punitive Gallic IHT laws -- but it is crucial to set up an IHT mitigation plan before taking up residency. Spain, currently host to 761,000 permanent resident Brits, also has quirky death tax laws. Mr Wilcox explains that, unlike the UK, assets in Spain do not pass automatically to spouses tax-free on the first death, and the surviving spouse can be vulnerable to Spanish inheritance tax. "The tax-free allowance is just 15,957, and a further 34% kicks in on amounts over 79,755 -- but, in some circumstances, for example if they are not a blood relative, expats can be liable to pay 82% under current Spanish law, unless they have made pre-domicile arrangements." MORE INFORMATION? Enter the Fast Facts number into the Reader Reply Service coupon onpage20orgoto www.expatinvestor.com Thereafter, the rate is guaranteed to pay 0.60% below base rate until 1 January 2010. There are annual, monthly or deferred interest options allowing accountholders to time their interest payments to suit their needs. The minimum investment sum required is £5,000 and the maximum balance per account is £2 million. position and preparation of annual tax returns. The Bank's customers can choose from three levels of service depending on the complexity of their needs: online (£99): for people who are employed, or retired, with up to 10 different sources of investment income. standard (£199): for those receiving rental income or receiving income from abroad. complex (£249): for those receiving rental income from a number of properties, self-employed and those who aren't considered to be resident for UK tax purposes. Lloyds TSB estimates there are around nine million people who have to complete tax returns every year and of these, nearly half complete the forms without any professional guidance. As a result, 32% of forms submitted contain errors. Jacqueline Pateman-Jones, Head of Wealth Protection, Wealth Management, says, "By using the Lloyds TSB tax service, customers will know that their return will be completed accurately, delivered on time and they won't pay a penny more than they owe." The new tax service is currently available to Platinum and Premier current account holders but Lloyds TSB will be rolling out the service to all customers at the beginning of next year. www.lloydstsbtax.com.
July August 2007