commercial property 29 Planning with trusts


Despite the restrictive nature of tax planning opportunities, the fundamental principles still exist and trusts can be used in many efficient ways; there are no better examples of this than when real estate and construction transactions are contemplated, writes Richard Stradling, chair of Baker Tilly's southern region real estate and construction team


Protection of property


Trusts may be used to protect the owner/beneficiary from a claim on a potential business failure or bankruptcy, prevent the squandering by the beneficiary of the assets, and to some extent from a claim on divorce.


A planning point may therefore be to provide the funds for the property via a loan from a trust, or even for the trust to acquire the property and the beneficiary occupy on specific instructions from the trustees.


Keeping control over the assets


Parents, grandparents or other


relatives have often been unwilling to transfer assets to children where there is a concern about their lack of judgement, or potential future influences.


Family company shares could be retained in a trust, or perhaps a house for use at a university might be provided, which the settlor may not want to give to the child outright.


Retaining property in the family


By placing family property into a trust the assets can be held for several generations, the beneficiaries can be varied, and there can be options to add or


remove beneficiaries and even appoint capital on certain events as long as the class of beneficiaries and trustees powers are drafted widely enough.


Parking possible future value or contemplating enhanced value


An interesting planning thought is to transfer property assets into trust where those assets have relatively low values, but where there is potential for enhancement of value in the future, for example via the removal of planning restrictions and/or changes to planning permissions and/or a re-development of the asset in question.


How The Localism Act could affect your rate bill


The 2011 Localism Act adds greater flexibility to the business rates system, giving new rights and powers for communities and individuals, writes Laurence Roberts partner, rating, Vail Williams LLP


Previously, local councils have relied on income from business rates being redistributed to them from a central government pool as part of a formula grant. As from April 1, 2013, councils can keep a share of business rate growth in their area, making them financially independent from central government and giving a strong incentive to local business growth.


Mandatory relief (by way of small business relief, rateable value exemption limits, and agricultural and charitable exemption) still continues to ratepayers with little or no discretion by the billing authority. However, localism provides new discretionary powers for local authorities to reduce the business rates of any local ratepayer. This may apply to emerging or developing businesses where there could be


a positive impact on employment and to the local economy.


Councils are required to fund 50% of the cost incurred in providing discounted bills which is recovered from residents via council tax unless they can generate enough revenue from other sources.


Since councils now have more responsibility for the cost of granting certain reliefs, these changes give them greater financial interest in rate collection. This is likely to result in greater scrutiny of relief applications and discretionary relief granted less frequently. It will particularly affect those paying rates on partially occupied premises who, until now, have obtained rate relief on temporarily vacant parts.


Councils will also have more THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2013


incentive to work closely with the Valuation Office Agency to ensure that all business properties in their area are valued correctly and are paying the right tax. They are likely to tighten procedures for identifying alterations and extensions to premises to ensure rating lists reflect these changes.


Equally, charities won’t escape scrutiny and they will have to demonstrate more thoroughly that they are using their premises ‘wholly or mainly’ for charitable purposes. So while certain prospering businesses may derive financial assistance from local government, other companies which have applied for and obtained relief in the past may find billing authorities less accommodating.


If occupational costs are to be kept under control, it will be even more important for ratepayers to ensure their rating assessments are reduced to the lowest level and to take advantage of all opportunities from material changes, whether temporary


or permanent, which adversely affect their premises.


While this may not mean rushing into an appeal which might bring to light an under-valuation, ratepayers are encouraged to seek proper professional advice on how the changing world of rating can influence rate bills, leading to the future success or failure of their business.


Details: Laurence Roberts 07760-167947 lroberts@vailwilliams.com www.vailwilliams.com


Care is required in the drafting of the trust deed and the structuring of the trust Investment. Suitable legal advice should be sought.


However, if there is a requirement for the settlor to hold some sort of continuing interest in the asset or the income the asset may generate, then a trust may not be the right planning concept.


Tax advantages


There is not room in this article to expand on all the tax advantages and disadvantages of trusts and full consideration of all taxes is imperative. It suffices to say there are continuing benefits for the family in keeping trusts very much in mind when considering a property transaction and the on-going strategy for the asset in the future.


Details: Richard Stradling 01179-452000 richard.stradling@bakertilly.co.uk


www.businessmag.co.uk


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