Focus CPA Group, Inc. (562)281-1040

It’s frequently the case that a person may be UK resident but intends on becoming non UK resident at some point in the future. In relation to a UK company owner what they’re looking for are any options available to them to reduce the rate of UK tax that they’re paying.

In terms of mitigating liability to UK income tax the key point is to consider retaining maximum profits within the current UK company and keep cash extractions to within the basic rate tax band, if possible. If cash was extracted predominantly as a dividend receipt there should be no UK income tax for a basic rate taxpayer. Any amounts in excess of the basic rate tax band would be taxed at an effective 25%.

If however they retain cash in the company and extract this when they are non UK resident they would not be charged to UK income tax on the receipt. There is also no withholding tax for dividend payments made overseas and therefore if they were located in a tax haven or other jurisdiction with favourable rules in relation to overseas dividend receipts the cash could be extracted free of tax.

The overall tax rate would then be the corporation tax originally suffered on the company profits at 21 – 29.75%. If they sold the shares as non UK resident individuals they could also sell the shares in the company free of UK CGT.

The main downside to this is that the company, as a UK incorporated company would remain charged to UK corporation tax, even if the shareholders were based overseas. The one exception to this could be to ensure residence in a double tax treaty country and claim the company to be treaty resident overseas. If the UK company then had no fixed base of working in the UK (ie no UK permanent establishment)it would be taxed on profits arising overseas.

If the shareholders were looking at generating new products or services in the period prior to becoming non UK resident they could also consider holding any new products personally and trading as a partnership. They could then leave the UK in the future and assuming the trade was not classed as a UK trade the profits generated after they left the UK would be outside the scope of UK taxes.

Another option would be to transfer any new products to an offshore company or trust or use the offshore company as a form of recharging company to accumulate profits tax free overseas. Provided the company was non UK resident the company would not be taxed in the UK, on the basis there was no UK trade. If any cash was extracted from the company, this would clearly be subject to UK income tax, however provided the entity was established in a low tax jurisdiction and no cash was extracted until after they became non UK resident there could be no tax liability on the companies profits.

Note that any transfer of an existing trade to the new offshore company would be difficult. Given the current trade is already revenue producing it would be likely to have a significant value. As such a transfer from the UK company to an offshore company would crystallise a gain in the UK company, which would be subject to corporation tax.

The main problems in using an offshore company are:

- Company residence

- Transfer of assets abroad legislation

The offshore company would be classed as UK resident if its management and control was situated in the UK. If the shareholders are UK resident the only way you could argue that the company was non UK resident would be to appoint an independent overseas board of directors. Nominee directors would not be acceptable to HMRC if they acted purely as nominees for the shareholders. In this case the company would be controlled from the UK and would be UK resident.

Another option in terms of residence would be to use an offshore trust to hold the shares. The offshore trust would need to have overseas trustees and in conjunction with the overseas directors this may make it easier to establish non UK residence for the company. The use of a trust would however complicate matters particularly in terms of UK IHT and the shareholders would need to be excluded from the list of potential beneficiaries and trustees in order for the trust to be established as non UK resident and to prevent anti avoidance rules impacting.

The other issue with the use of an offshore company is the transfer of assets abroad provisions .

The conditions for these anti avoidance rules to apply are:

Now is the best time to start thinking about your year end tax planning for your business? These tax strategies can be put into effect by the end of the year and some as late as when the tax return is due. Planning now will save you money and reduce your tax liability not only with your IRS taxes but also with your state taxes. Here are tax tips that will help you accomplish your goal. DEFER YOUR INCOME INTO 2005 If you don?t receive payment until the first week of January for cash basis tax returns and don?t bill until January for accrual basis tax returns, you have effectively deferred your income. This works well if your 2005 income is equal to or less than it was for 2004. If not, you are delaying the inevitable and potentially putting yourself in a higher tax bracket for 2005. ACCELERATE DEDUCTIBLE EXPENSE INTO 2004 Anything charged on your business credit card December 31st and prior is deductible in 2004 even if it is paid in 2005. You can also write a check on December 31st that you would have normally paid in January. You may want to get a confirmation receipt to prove you mailed those checks in 2004. This works well if your 2005 income is equal to or less than it was for 2004. If not, you are delaying the inevitable and potentially putting yourself in a higher tax bracket for 2005. OPEN A RETIREMENT PLAN ACCOUNT See http://www.dgoodmancpa.com/smallbusinessretirementplan.htm for an example of what you can do with that available profit tax deferred until retirement. This is a fantastic option for those who have the cash and want to contribute money into their personal retirement account and deduct that contribution from their corporate earnings. Does it get any better than that? BUY EQUIPMENT AND SOFTWARE BEFORE YEAR END You can deduct up to $100,000 in equipment and software purchases for the year under Section 179 depreciation expense. This includes sport utility vehicles, pickups and vans with a gross vehicle weight rating over 6,000 pounds. However, businesses should be aware of the change due to the American Jobs Creation Act of 2004. Certain sport utility vehicles (SUV?s) are limited to $25,000 if they were placed in service after October 22, 2004. These are just some tax tips you should consider when thinking about your year end tax planning for your business. This article was intended to provide general information about year end tax planning. It does not contain all the rules and exceptions that may apply to your situation. If you have further questions regarding year end tax planning, I can be reached at www.dgoodmancpa.com.

Many clients have accumulated substantial funds within ISAs and PEPs over the past 10 years and enjoyed significant tax breaks in the process.

It’s not unusual to see clients with capital in PEPs and ISAs in excess of

Inheritance tax is money that is paid on the value of the property you own. There is a nil rate band and can be assessed when you send in your inheritance tax return. The nil band rates can affect your capital gains tax.
The tax and benefits that you gain can save you more tax and the tax you pay on your property can be minimised by good planning.
Estates can be put into trusts and there is also a thing called generation skipping transfer.
Inheritance tax will be assessed on the value of your property and other assets and your tax returns will be used to assess your estate tax.
More about inheritance tax and income tax can be found online and it is important to know your rate bands and know about your tax level.
You may be eligible for self assessment and your assets must be totalled to rate your capital gains rate bands.
Knowing about tax and inheritance tax in the United Kingdom under their jurisdictions. Is important and understanding capital gains tax should be understood and know what tax is due.
Your tax rate and possible stamp duty when you buy a property goes to the hm revenue, you may even get a tax refund.
If you have a civil partner and there is a law that states that you have to outlive your benefactor by seven years.
Make sure your papers are filed in good time and prepare for the fact that you might have to pay death duty.
Tax shelters can be used and you have to make sure the total of your gross estate is known at the market value. You can have a personal representative to advise you on generation skipping. it is also called skipping transfer to help transfer tax.
Tax payments are part of life and you can pass on your estate and let your family inherit it without paying tax if you plan ahead.
You pay death duty on your death and your family pay inheritance tax on your estate. it really is imperative that you plan ahead and if you are able try and be as exempt as possible.
If you have a son or daughter speak to them and let them know your plans. Plan your estate as effectively as possible.
Calculate your assets and plan your future to protect your family.
Take out insurance and ensure that you have an income and also that your family do not end up paying death duties and inheritance tax after you die.
Land and money as well as other assets all go to your estate and will make a difference to your family. Transfer what you can and search for a positive solution. Also make sure you provide for your pension too. We all need money and our beneficiaries do not want to have to deal with all the problems that they will face if you do not deal with your estate.
Live in the present but plan for the future. take professional advice from an expert financial planner.
Know your allowances and the benefits you can expect from the system.
You must not beak the rules and know your subject, your allowances and question everything.
In addition to the normal allowances there are ways to sort it out and increase the benefits to your family.
There are exemptions and also the your mortgage will make a difference.
Inheritance tax and estate planning is easy if you do it in good time. If you don’t it will cause your family a lot of pain and heartache when they could well do without it. So, look after you wealth and your families future happiness.

Taxes is a share of government from the individuals income and in return tax payer gets better community and social services, better infrastructure, security of himself and other nationals and clean environment. Tax, although sometimes seems to be a burden on the soldiers of the individual, but it is necessarily required by the government for spending on various accounts including the functioning of government. So it is the responsibility of nationals to share one’s income with the government in line with the various rules and regulations enacted by government and tax authorities.

Tax laws in United States are complex and always keeps on changing. For an individual, it is necessary to know the exact tax return filing procedure, so he or she can reduce the tax burden. Some of the procedure has been summarized below. One has to critically examine the procedure of filing return, so individual or families obtain the maximum benefits.

(a)INDIVIDUAL TAX FILERS: You must file income tax return under this category if your annual income is above $ 7900 for the current financial year or you have spend $ 400 or above on self-development. Further if your annual income is below $100,000 from wages, salaries, interest (less than $ 1500) and unemployment compensation, you should file in form no. 1040 EZ

If you are claiming other deductions, such as education expenses, tax credits, deductions relating to IRAS and pensions, you should use form 1040A.

(b)STUDENTS: If your annual income is above $7900 or you spend more than $ 400 on self-development, you must file income tax return on form no 1040EZ.

(c)DEPENDENT: If your age is under 19 or 24(for full time students) , you could be claimed dependent only by your parents. In that case, you must file income tax return if your unearned income is above $ 800 and earned income is above $ 5000.

(d)MARRIED: Married status is determined on the last day of the financial year, if your spouse died anytime during the year, you can still file joint tax return with him or her, provided you have not remarried.

(e)RETIRED : If your earned income is above $7900 for the current financial year you will have to file return.

(f)CHILD: If a child earns more than $5000 or his or her investment income is over $ 800, he or she is liable to file tax. If he or she is unable to file , parents must file tax after taking security social number.

FILING RETURN FOR OPTIMIZED INCOME:
Filing income tax is one of the art, which requires all permutation and combination to achieve highest rebate. Some of the useful filing method has been summarized below.

(a) MARRIED FILING JOINTLY: When one of the spouse is earning significantly more than the other, joint filing is advisable, unless any one of them want to claim more deductions. In that case, best tax rates are achieved.

(b) MARRIED FILING SEPARATELY: Married couples filing separately are generally in least favorable brackets. There are some situations, when it is advisable to married individuals to file separately.

(c) HEAD OF HOUSEHOLD: For a head of household, the income tax rates are lower and the standard deduction is higher. To qualify one must be unmarried at the end of the financial year, one should have maintained a household for children, parents, qualified relatives, and should have paid at least half of the annual expenditure for home, children, parents’ qualified relatives etc.

If you are separated, but still married and you live with your child, the head of household status affords you better rate than the married filing separately status.

(d) WIDOW/WIDOWER STATUS: If some one falls in this category, he or she should file in this category to obtain best tax rates.

Federal tax laws exempt property up to two million dollars from estate tax. They also allow a one million-dollar lifetime limit for gifting property without attracting any gift tax. However, there is a rider that the value of the gift must not exceed twelve thousand dollars to any one person during a single calendar year. Estate tax exemption is set to rise further to $3.5 million in 2009 and stands to be repealed in 2010, which will be a year free from estate taxes. Thereafter, in 2011, the Congress is expected to confirm a full repeal of estate taxes failing which, the old estate tax structure would return with an exemption limit of $1 million.
There is a supplementary provision to estate tax that is known as Marital Deduction. This allows one spouse to leave any amount of property at death to a remaining spouse without creating any estate tax liability. This provision is applicable only if the remaining spouse is a US citizen. If not, then the benefit of marital deduction can be availed only if the property of the deceased spouse is left in a QDOT or qualified domestic trust. This position has been effective since the passing of the Technical and Miscellaneous Revenue Act (TAMRA) in 1988. Among other requirements, a qualified domestic trust needs to have at least one US trustee who is citizen of the United States or is a domestic corporation. If the value of the assets of the deceased exceeds $2 million, the QDOT needs to be a US bank.
In order to avoid soaking of a substantial portion of ones assets in estate taxes, and to let a greater share be available for the benefit of loved ones, people form bypass or family trusts. These are excellent means to lower estate taxes. Such trusts can have a character of a lifetime trust or a testamentary trust. In a lifetime trust, the property is passed on to the trust either during the lifetime of the grantor or owner of the property. In a testamentary, trust the property passes on to the trust through a will after the grantors demise.
The trust is a separate legal entity that enjoys the status of an owner. The property it holds is not recognized as part of the estate of the grantor. No estate tax can be imposed on the grantors death as the owner i.e. the trust still survives. The trust property is managed by trustees for the benefit of designated beneficiaries.
When a married couple forms a bypass trust as part of their estate plan, each leaves property up to their estate tax exemption limit (currently $2 million) to the trust. On the first death, the rest of the property of the deceased can pass on to the surviving spouse under marital deduction without paying any estate tax. The assets in the bypass trust can be made available to the surviving spouse for upkeep, health and other needs. The survivor may even be authorized to draw a certain amount of the principal every year. On the death of the surviving spouse, the trust assets would pass on to beneficiaries named in the trust deed without attracting any tax. This is because the trust was created with assets within estate tax exemption limits to which the creator of the trust was entitled. The assets of the last to die spouse would be taxed subject to the exemption limit of $2 million.
This way, the whole estate (of both the spouses) gets the additional exemption benefit of $2million of the first to die spouse also which leaves more money for their surviving children/heirs/beneficiaries.
It should be noted that if the first to die spouse does not create a bypass trust and just lets the whole property pass on to the surviving spouse through marital deduction, his/her entitlement for the $2million estate tax exemption would simply fizzle away. Fewer assets would pass on to loved ones after the death of the second spouse in this case.

There are many reasons that make an estate plan very important. When you are unable to take decisions regarding your healthcare due to illness or accident there needs to be someone who can legally take such decisions on your behalf. Alternatively, if you require long-term care, which is not covered by medical insurance, you have to make alternative arrangements beforehand. There may be many responsibilities that would need to be performed in case of your incapacity or death. Your estate plan can cover all arrangements in case of the above-mentioned eventualities. To find out how it can do this, read on.
a) Planning for incapacity:- It is important to have arrangements that can ensure that you are taken care of in the event of your incapacity. To do this
. Make a living will:- This legal instrument documents your intentions about using life-sustaining measures when you are in a state of terminal illness. It expressly states your wish in this regard and acts as a bar for anyone to speak on your behalf.
. Prepare a health care power of attorney:- This document is to authorize a specific person to decide upon your healthcare measures when you fall in an unconscious or vegetative state or are unable to take your own health care decisions on account of any other reason(s). Laws in all states are not uniform on this issue but many state laws can permit you to include instructions about continuing or withholding life-sustaining care in this document.
. Buy Insurance for long-term care:- As things presently stand, health insurance does not cover the cost of long-term care. As such, in case when such care becomes necessary it is your spouse or other family members who have to foot the bill. The remedy is to take out a long-term insurance policy.
. Form a revocable living trust:- A revocable living trust will enable you to appoint a trustee who can succeed you in order to manage the trust when you cannot do this due to injury or illness/death and avoid any probate court guardianship issues.
. Create a durable power of attorney:- This a legal document that lets you appoint an ‘attorney-in-fact’ or ‘agent’ who can perform various responsibilities on your behalf. There are many responsibilities involving banking transactions, safety deposit boxes, insurance claim settlements, filing of tax returns, matters related to government benefits, purchase, sale and management of real estate etc. that have legal implications. The durable power of attorney will vest your agent with authority to carry out all the work on your behalf, legally.
b) Avoiding probate:- You can avoid you heirs going through harrowing probate proceedings, which are also very costly and can consume a big part of your estate in legal costs and fees. ‘Transfer on death accounts’ avoid probate proceedings letting you maintain sole ownership of assets as long as you are alive. Designate beneficiaries for annuities, individual retirement accounts, life insurance, and retirement plans. Note that these designations have precedence over other claims arising out of trusts, wills etc. Revocable living trusts also help avoiding probates as your trustee takes charge to manage/distribute your property in accordance to your wishes in the event of your death or incapacity. Titling your assets as ‘joint ownership with rights of survivorship’ can also avoid probate.
c) Forming charitable trusts or making gifts to charity:- Depending on your goals, you can make gifts of IRAs, retirement plans, annuities, make charity a beneficiary to life insurance benefits or establish a charitable trust(s). There are ways through which you can avoid estate tax, capital gains tax, get a reduction on income tax payable etc. along with receiving lifetime income from assets that are to be distributed to charity after your death.
d) Avoiding estate tax burden:- Form other trusts to eliminate/mitigate estate tax payable by your heirs:- You can form bypass trusts, A/B trusts or other types of trusts to ensure that your heirs are not burdened by avoidable estate taxes. Your estate tax consultant will be able to guide you how to go about this.

Sensible and concrete tax planning is essential to minimize all tax liabilities. Well-timed tax plans decrease the hours and labor required for revenue preparation. Tax planning helps you to fulfill your legal tax obligations and makes sure you

Fall When your children go back to school and the leaves start falling from the trees, you need to start thinking about taxes. The year is coming to an end, and if you have a steady job then you should have a pretty good idea about what your total income is going to be for the year. Once you

As we all know, the magic tax date is April 15th each year when tax returns must be filed. Well, at least that is what we are told. In truth, the magic period for taxes occurs in the months of November and December. Well, that is if you want to limit the amount of tax you pay on April 15th.

The subject we are talking about is, of course, tax planning. It doesn’t exactly sound appetizing, but it is. The key to limiting the pain of paying Uncle Sam every year is to plan ahead and configure your finances in a manner that maximizes tax credits and deductions. It sounds obviously, but millions of Americans leave so much money on the table each year that it is ridiculous.

Tax planning can actually be relatively simple. Let’s look at the green revolution for an example. You’ve noticed the water heater in your home is getting pretty creaky and rusting. It could go at any time. Should you wait for it to blow up and flood the home? No! Instead, you can go buy an Energy Star rated water heater. The Energy Star designation indicates the water heater meets certain efficiency criteria and qualifies for a tax credit. The tax credit with water heaters is 30 percent of the cost up to $1,500.

Let’s assume you buy and get a tax credit of $1,000. Do you realize the value of that? Tax credits are much more valuable than tax deductions. Why? Tax credits are a dollar for dollar deduction from the amount you owe Uncle Sam instead of just a way to reduce your gross income. Let’s put it in a way that is simpler to understand. You would go ahead and do your taxes just like always. Once done, you’ll owe the government some figure and would normally send in a check. Ah, but not now. Instead, you would deduct the $1,000 tax credit from that amount. It makes a huge difference!

Let’s be brutally frank. You have no right whatsoever to complain about the taxes you pay if you don’t do any planning in November or December. If you want to pay less in tax, make some effort to do so! The key is to finding a proactive CPA that can help you put together a plan that is going to slash your tax bill. This is the only real way to cut your taxes.