Milestone is a boutique international tax practice established in Mayfair, London.

Open

Careful planning for inheritance tax mitigation

The Client

Private individual

The Problem

After the death of their father, a UK family with an extensive property portfolio asked to consider ways in which their estate could be restructured to mitigate a potential tax levy.

Although their mother had inherited the entire portfolio, she was in poor health and the family risked losing 40% of their assets on her death.

The Solution

  • As the portfolio was transferred under ‘spousal exemption’, there was no uplift in base costs on death. We proposed transferring the property portfolio into a limited liability structure in order to defer a crystallisation of the latent capital gain in the portfolio.
  • We partially restructured the portfolio to take into account the significant rent roll and reduce the impact of the 50% income tax from 2010 through internal debt funding arrangements.
  • The family was now able to utilise the available domestic exemptions and gain sufficient structural flexibility to mitigate additional transfers of the portfolio.