Was watching the Andrew Marr show this morning (Sun 12 Apr). Don't ask me why.
Andrew Marr asked Harriet Harman to defend Ed Milliband's tax avoidance shenanigans in entering into a deed of arrangement in respect of an inheritance from his parent. Harman responded that Ed Milliband had done nothing to avoid CGT and had paid the full amount of CGT as required.
Marr did not pursue it. What a waste of opportunity.
If he is not going to specify IhT avoidance in the question, as a ploy to lure Harman into the trap of sidestepping the question into CGT when she would know full well that IhT is the issue, then the least that Marr can do is then to spring the trap.
With kind regards
Clint Westwood
Replies (27)
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I saw that too. I don't know the detail of the Milliband case, but from the Segway into CGT I assumed that their purpose in using a deed of variation was to "split" the ownership of a property which had been left to one person, to many people. This would then allow them to sell the property and each use their annual exemption against the CGT.
In this way he may have paid "the CGT which was due on his share" (as Harmon said) but a considerable amount of tax has been saved
The other thing that is rarely challenged is the "tax cuts for millionaires" sound bite that is trotted out in reference to the reduction in the top rate of tax from 50% to 45% - given that the 50% applied for about 30 days of the 13 years of the Labour administration. 40% being the highest rate for the overwhelming majority of the time.
Labour loves their lies
The other thing that is rarely challenged is the "tax cuts for millionaires" sound bite that is trotted out in reference to the reduction in the top rate of tax from 50% to 45% - given that the 50% applied for about 30 days of the 13 years of the Labour administration. 40% being the highest rate for the overwhelming majority of the time.
The tax is a tax on income not wealth.
@nogammonsinanun
I wasn't saying the CGT resulted from the death, BUT if a large asset like a house was in the hands of one person and they wanted to sell, the CGT liability would occur on the disposal. You could mitigate it by putting the ownership (temporarily) into the hands of many.
I would be surprised if the Telegraph have it right. Anyone who has bothered to make a Will (and the Millibands are certainly educated in such matters) would have it written to create a Will Trust on the first death to utilize whatever the nil rate band is at the time.
Out of interest, how could you "share stuff out after death" without a DoV (and without creating any potential Tax liability on the part of the beneficiary who is making the gift?
IHT & CGT
You share it out by a deed of conveyance. There is no CGT because we are presumably talking about a small interval between receipt of inheritance and redistribution. There will be no measurable difference between the CGT base cost, being MV on death/inheritance and MV (deemed disposal proceeds) on gift a few weeks later.
Sorry, but I fail to understand your angle.
With kind regards
Clint Westwood
OK, but (and I admit we don't know the facts) my guess is that originally , dad dies and leaves the property to mum. If mum keeps it there will be IHT when she dies, so the deed of variation both reduces this AND saves a chunk of CGT since with multiple owners on the title deed they can all use claim their annual exemption when the property is eventually sold. I would imagine that this would be some time in the future when mum dies and the property could have appreciated.
Anything other than a DoV would allow the property into mum's estate and potentially a big IHT charge. I would be surprised if this is it though because I'd have thought they would have a family Trust (perhaps it's against their principles?!)
A few weeks....
There will be no measurable difference between the CGT base cost, being MV on death/inheritance and MV (deemed disposal proceeds) on gift a few weeks later.
You are obviously using different solicitors to me!
Not so fast
Without knowing all the facts I am not so sure that, in the event, tax of any description was actually saved by the Miliband family's DoV. That surely depends upon whether mother is still alive, whether the house has been sold & what the total value of mother's assets is (now if she is still alive, on the date of her death if she is not).
RM
It appears the father's death predates the transferable IHT nil rate band. If all went to the mother under the original will, then one nil rate band would be unused. If the will was varied to gift an amount equivalent to that nil rate band to the sons, then on the subsequent death of the mother, an IHT saving has been made.
That's not a very good explanation but hope the principle is apparent.
The CGT point is a red herring. The issue is tax saved on receipt of the asset, not its subsequent disposal.
Moynahan asked the same question 30 minutes later of another Labour cohort. Marr was more persistent
PPR?
If the property is Mum's PPR then there is no CGT saving on a transfer of part of it to the children on Dad's death (or shortly thereafter).
RM
Assume
If the property is Mum's PPR then there is no CGT saving on a transfer of part of it to the children on Dad's death (or shortly thereafter).
RM
Assume that's what HaHa (Harriet Harman) was clinging on to - rather than addressing the IHT point.
They all lie!
Labour loves their liespetersaxton The Tories said they wouldn't increase VAT ... but they did! They said the NHS was safe in their hands, followed by A&E closures up and down the country. Our local NHS has had £3.5M cut from it's budget .... and so on ... and so on.
Show me a politician who doesn't lie and then I may get excited!
There's a difference
Labour loves their liespetersaxton The Tories said they wouldn't increase VAT ... but they did! They said the NHS was safe in their hands, followed by A&E closures up and down the country. Our local NHS has had £3.5M cut from it's budget .... and so on ... and so on.
Show me a politician who doesn't lie and then I may get excited!
There's a difference between saying one thing in opposition and then doing something else in government. That is called changing your mind. Circumstances can change. I don't think a government should have to stick to their promises because it may be a silly thing to do - even sillier than making a promise in the first place. A manifesto should be a statement of general intent not specific policies that need to be carried out in the next five years whatever happens.
Calling something a tax on millionaires when it isn't is just plain wrong. Nowhere near everybody who has £150k of income a year is a millionaire.
Don't make promises
There's a difference between saying one thing in opposition and then doing something else in government. That is called changing your mind. Circumstances can change. I don't think a government should have to stick to their promises because it may be a silly thing to do - even sillier than making a promise in the first place. A manifesto should be a statement of general intent not specific policies that need to be carried out in the next five years whatever happens.
Calling something a tax on millionaires when it isn't is just plain wrong. Nowhere near everybody who has £150k of income a year is a millionaire.
Promising something (and very emphatically) that you haven't a hells chance of achieving is something else! eg. No ifs, no buts!
As I said: Don't make promises.
A DOV
gets around the seven year rule - I recommended one (two actually) for a client last year. Perfectly legal way of moving what was for the client, part of a massive sum inherited, to his children. He still has two months to do another.
Manifesto's
At the end of any governments term, they should be presented with the promises made, and the manifesto upon which they gained power, and then asked to explain why they changed it!
Their response should be made public.
Andrew Marr
A left-leaning presenter working for a left-leaning employer.
All's fair in politics.
The (political) point
Surely the point is that some 20 years ago the Miliband family engaged in a Deed of Variation (presumably) with the intention of saving tax.
At that time (& now) a DoV is a perfectly legal, ordinary & unsophisticated arrangement which operates for various purposes - one of which is tax avoidance.
However Ed Miliband currently leads a political party which is intent on reducing tax avoidance.
Therefore there is arguably some political embarrassment for Mr Miliband.
RM
Avoidance
Hasn't the definition shifted, become blurred, amorphous in recent times? Does anyone know anymore what Miliband might mean by tax avoidance and would Cameron share his view?
Are ISAs a form of tax avoidance, or low salary/high dividends for company owners? We don't think so, obviously, but some might.
Is the DofV something that some people might regard as modern day 'avoidance'? If so, should Miliband explain why it is not? And if the matter involved Cameron, would Miliband or Harman have ignored it?
Wasn't it amusing information that class warrior Harman went to the same school as Osborne. They are all hypocrites but am I wrong to feel more let down by a Labour hypocrite?.
He asked one question
She answered another one. But then this is the woman married to what is assumed to be a man who won the nomination in a women only shortlist to become Jack Dromey MP.