Equipment Leasing - A Flexible Technique for Tax Planning

Article Abstract:

Equipment leases are generally finance leases meaning the lessor leases an asset for a given period, receives rental payments that cover his initial outlay plus earn him profits. At the end of the period, the equipment may be sold to the lessee or re-rented at a nominal rate. The after-tax return on the lease is higher than ivestment in the money market, in the United Kingdom. Legal ownership must be retained by the lessor for him to recieve capital allowances. First year allowances may be taken if the equipment is used for acceptable purposes - that is if the lessee could have taken the allowance if he had bought the machinery or plant. The ability to use losses in leasing to cover past years' profits makes it a pracitical tax planning tool. Isolated transactions do not qualify as a leasing trade therefore do not attract as beneficial tax circumstances. Documentation of entering the trade of leasing should be made by the company with a minimum of three transactions involving different lessers and types of equipment. A subsidiary for leasing may be appropriate but caution is wise.

Equipment and supplies, Leases

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Efficient Gifting II - Where Are the Savings?

Article Abstract:

Capital Transfer Tax (CTT) in the United Kingdom can be avoided by parents by transfering their home to their children and the children allowing them to live there rent free. No capital gains tax will be paid on transfer or ultimate sale. Premiums on insurance can be paid assigning a beneficiary. The premium would be considered a gift, but avoid gift-tax by remaining under the limit. The payment on death would not be part of the estate. Pensions can be passed to beneficiaries other than the spouse tax- free so that the spouse can receive the taxable portion of the estate exempted. Interest-free loans can be used to bypass capital transfer tax. Passing a family business or shares in a company are more sensitive. Timing is critical. A trust does not necessarily alter tax liability, but keeps the donor in control longer. A deed of variation can be drawn up within two years of death for one who died without a will or with an outdated will.

Laws, regulations and rules, Gift tax

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