How can I protect my assets from a Wealth Tax?

There is much talk of what a Labour Government may decide to do should they get into power. Some of that talk centres on whether they will look to introduce a Wealth Tax.

What form a Wealth Tax might take would be anyone’s guess, but a firm favourite would be a tax on property. It could be anything from 1% to 3% of the value of your home each year, though it is likely to be on property worth in excess of £1m to £2m.

For some, having a valuable property (which they may have owned for the last 50 years) doesn’t make a person wealthy and some will struggle to pay any Wealth Tax.

It could also be extended to a tax on other property you own, from buy-to-lets to commercial property. Even worse, it might be on all assets, from ISAs, shares, to private pensions.

Should a Wealth Tax be introduced, there might be some areas where you can limit the impact, though this would be subject to what the tax is and what your assets are, but this can be worked through with experts.

While offshore companies and offshore bank accounts have a role to play, anything with your name on it, HMRC could take a look at still. This is where Trusts come into play.

Placing assets into a trust means that they technically are no longer owned by you and won’t be accounted for within any Wealth Tax. However, while having an offshore trust isn’t illegal, HMRC are clamping down, and any UK company you use to renew your trust annually will be required to report it to HMRC. Our advice is to think carefully about the company you use to do your annual renewals. Companies not based in the UK aren’t subjected to the UK laws and aren’t forced to report on it.

It is right that we have discussions around a Wealth Tax and that economists etc. are allowed to make a case against them as it should hopefully show how unworkable and grossly unfair a Wealth Tax might be. But it is scaring off wealthy people already as we’re seeing an exodus of wealthy people already leaving the UK for countries that look more favourably on them. This alone has a counter effect to what is intended by the UK government as we’re losing ultra-high net worth individuals who pay considerable amounts of tax already.

It is why Portugal is becoming a haven for people fleeing the UK. You can read more on the benefits Portugal has to offer here.

If you are worried about how further changes to taxation laws could affect you, then it is worth talking to experts in this field. Contact our trusted team today.