Tax

Five important considerations ahead of the US Tax Year End

November 14, 2019

For Americans living in the UK, financial planning and wealth management is complex. It affects everything from income and capital gains, to pension saving and gifting, and it must consider different regulations, tax calendars and currencies.

Robert Paul, Head of the US Family Office, explains five things that Americans in the UK need to consider in the run-up to the end of the US tax year.

To speak to Robert or another member of the US Family Office, please give us a call on +44 (0) 207 396 3388 or alternatively email invest@londonandcapital.com

Disclaimer: The value of investments and any income from them can go down as well as up and investors may not receive back their original investment amount. This communication is for information purposes only. It is not intended as a personal recommendation of particular financial instruments or strategies and it does not provide individually tailored investment advice. This document provides the views of the London & Capital Investment Team examining the fundamental background, economic outlook and possible effect on asset markets. This document is not an invitation to subscribe and is by way of information only. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be solely relied on in making an investment or other decision. If you are considering investing, you should consult your London & Capital adviser. The views expressed herein are those at the time of publication and are subject to change. Correct at time of going to press.

London and Capital Asset Management Limited is authorised and regulated by the financial conduct authority, 12 Endeavour square, London, E20 1JN. Firm reference number 143286. Registered in England and wales, company number 02112588. © London and Capital Asset Management Limited. All rights reserved. London and Capital Wealth Advisers Limited is authorised and regulated by the UK Financial Conduct Authority (firm reference number 120776) and by the U.S. Securities and Exchange Commission of 100 F street, NE Washington, DC 20549, with sec firm reference number 801-63787. Registered in England and Wales, company number 02080604. © London and Capital Wealth Advisers Limited. All rights reserved.

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- Will HNW Americans vote with their pockets? How post-election tax changes might affect wealthy Americans in the UK
  October 16, 2020Wealth PlanningThe countdown to the 2020 US Presidential election is well underway, and whether the outcome will be a blue or a red winner, is still far from certain. What is clear, is that the very different tax positions proposed by the Republicans and Democrats could have a very significant impact for wealthy US citizens. What are the differences in tax policy? Jonathan Gold, Executive Director on our US Family Office team, outlines some of the major policies being proposed by Joe Biden and Donald Trump. Taxes Democrat Republican Income Taxes Return to the 39.6% top rate Income Tax from 37%. Abolish the preferential 20% rate for Qualified Dividends for incomes >$1m. Limit the benefit of itemized deductions for those earning >$400k. Continue to restrict the deduction of State Taxes against Federal taxes meaning >50% tax rate for those living in New York or California. Tax cut for middle-income families potentially by lowering the current 22% tax rate to 15%. Second round of stimulus checks (talk of $3.4k for a family of 4). During the period 1 Sep 2020 – 31 Dec 2020 employees earning <$104k per year will not have to pay 6.2% social security. This may be forgiven permanently from 2021. Capital Gains Raising long term capital gains tax rates to match income tax rates (39.6% + NIIT) for incomes >$1m. Eliminate the step-up that exempts unrealised gains at death. Any gain would be subject to rates up to 39.6%. Abolishing the top 20% rate of long-term capital gains and setting the new top rate at 15%. A reduction in capital gains tax rates may be difficult to pass and as such this may be achieved by indexing gains to inflation. Estate Taxes Reduce the estate tax exemption to $5.49m from the current $11.58m (not adjusted for inflation) per individual. 40% Estate tax rate will remain unchanged. Likely to consider the extension of ‘sunset’ provisions beyond 2025. Corporate & Business Taxes Elimination of 20% Qualified Business Income (QBI) deduction for higher income taxpayers. Increase Corporation tax from 21% to 28%. May reduce corporate tax rate further to 20%. Increased allowable deductions including all meals and entertainment costs. State taxes New York considers tax hikes but only for ‘Super-Rich’ (Assets >$1b). California proposing a Millionaires Tax, putting into place a 1%, 3% or 3.5% surcharge in addition to the top marginal rate of 13.3% for taxpayers with incomes over $1m, $2m and $5m respectively. Other states including DC, NJ and PA propose tax hikes, with no specifics revealed yet. Among the reforms proposed by the Democrats are the following key policies: Rate parity of 39.6% (+NIIT) between long-term capital gains tax and income tax for incomes above $1m Reduction of estate tax exemption from $11.58m to $5.49m per person Removal of basis step-up upon death Depending on the outcome of the elections, these reforms may come into effect as soon as 1 January 2021. What planning can be done now? Realise long-term capital gains now Gift assets with built-in capital gains tax – shift the basis to the recipient Gift excess assets above core requirements Use of irrevocable trusts UK domiciled clients may have additional tax considerations. Before making any decisions, clients should consult their investment and tax advisors to consider their individual circumstances. London & Capital provides investment planning and tax-efficient investment strategies for Private Clients, including a team specialising in US-connected clients. If you would like to review your current investments or for some advice on establishing a new investment strategy, please contact the US Family Office team at London & Capital. To get more US Expat content direct to your inbox monthly, sign up to our newsletter HERE. By Jonathan Gold Executive Director, US Family Office To arrange a meeting with Jonathan, email invest@londonandcapital.com Disclaimer: The value of investments and any income from them can fall as well as rise and neither is guaranteed. Investors may not get back the capital they invested. Past performance is not indicative of future performance. The material is provided for informational purposes only. No news or research item is a personal recommendation to trade. Nothing contained herein constitutes investment, legal, tax or other advice. London and Capital Wealth Advisers Limited is authorised and regulated by both by the Financial Conduct Authority of 12 Endeavour Square, London E20 1JN, with firm reference number 120776 and the U.S. Securities and Exchange Commission of 100 F Street, NE Washington, DC 20549, with firm reference number 801-63787. Registered in England and Wales, Company Number 02080604 ...