Trust funds, tax and stuff.
Discussion
Phhht, where to start 
The kids (non taxpaying youngsters) have some cash (and a rental property in trust). A reasonable amount has been shoved in a couple of 'medium term' bonds. And we can write any 'trust gains' off this year hopefully after paying 'expenses' etc.
Presently about £20k spare sat in bank to 'lose/move' about to reduce tax liability before year end which is 45% on profits from what I can gather possibly reclaimable as both are non tax payers with a rental income approx £10k a year between them ongoing for the forseeable and some share holdings of approx the same value.
As we're coming up to year end I'm thinking of 'paying' them both about £3K or more before end of Feb and again in March to use some allowance. I had a quick chat to an accountant/bookkeeper and he suggested an IFA rather than accountant?? We recently started using SJP for some stuff but I still think we may need an accountant for tax returns etc any ideas which is the best way to go or any suggestions what to do? Preferably to reduce tax liability whilst looking for potential growth of invested funds.
The kids (non taxpaying youngsters) have some cash (and a rental property in trust). A reasonable amount has been shoved in a couple of 'medium term' bonds. And we can write any 'trust gains' off this year hopefully after paying 'expenses' etc.
Presently about £20k spare sat in bank to 'lose/move' about to reduce tax liability before year end which is 45% on profits from what I can gather possibly reclaimable as both are non tax payers with a rental income approx £10k a year between them ongoing for the forseeable and some share holdings of approx the same value.
As we're coming up to year end I'm thinking of 'paying' them both about £3K or more before end of Feb and again in March to use some allowance. I had a quick chat to an accountant/bookkeeper and he suggested an IFA rather than accountant?? We recently started using SJP for some stuff but I still think we may need an accountant for tax returns etc any ideas which is the best way to go or any suggestions what to do? Preferably to reduce tax liability whilst looking for potential growth of invested funds.
Why are the children non-taxpayers?
Children are not exempted from tax just because they are children. The same tax rules apply to them as anybody else. Obviously, if their individual income is below the Personal Tax Allowance they won't be receiving enough to pay any tax, but that is not because they are children. It's because their income levels are not high enough to make them taxable.
Giving money away (to children or anybody else) in general does nor reduce your own personal tax liability. It CAN be part of your Inheritance Tax planning strategy, although that is mainly useful if you are planning on dying sometime soon.
One way to reduce your own personal Income Tax liability is to engage in an activity that generates a bona fide business loss. If that happens, the loss can be offset against your other income thereby reducing any tax arising on that other income. HMRC are, of course, watchful for tax planning that seems to engineer losses just for this purpose, so you have to be careful getting involved in any tax planning schemes that seem to work on this principle.
An obvious and fairly easy way to reduce a tax bill is to pay into a personal; pension. Obviously, you may be doing this already and you may not have any further options in this are - particularly if you have already made full use of your annual contributions limit.
Children are not exempted from tax just because they are children. The same tax rules apply to them as anybody else. Obviously, if their individual income is below the Personal Tax Allowance they won't be receiving enough to pay any tax, but that is not because they are children. It's because their income levels are not high enough to make them taxable.
Giving money away (to children or anybody else) in general does nor reduce your own personal tax liability. It CAN be part of your Inheritance Tax planning strategy, although that is mainly useful if you are planning on dying sometime soon.
One way to reduce your own personal Income Tax liability is to engage in an activity that generates a bona fide business loss. If that happens, the loss can be offset against your other income thereby reducing any tax arising on that other income. HMRC are, of course, watchful for tax planning that seems to engineer losses just for this purpose, so you have to be careful getting involved in any tax planning schemes that seem to work on this principle.
An obvious and fairly easy way to reduce a tax bill is to pay into a personal; pension. Obviously, you may be doing this already and you may not have any further options in this are - particularly if you have already made full use of your annual contributions limit.
Thanks for the reply Eric, this isn't about my tax liability, I am too poor 
The children are below the income tax threshold (aka non taxpayers sorry for the misunderstanding). The money paid to them will not be from me but from trust fund capital,rental income about £10k PA after fees and just share dividends until we sell the last few holdings when they go back up (BT and a few other blur chip co's).
For IHT purposes i forewent about the £100k of my late wife's 'inheritance' due to 'quick succession' rules or something when she died (her dad died 14 days before her) to hopefully reduce any possible future tax liability going forward (but anything could happen in life).
I'm just trying to ensure we fully utilise the kids tax free allowance bearing in mind trust gains are taxed at 45% I understand then reclaimed if tax is paid. Maybe I'm overthinking it but I still think it's an accountant job rather than an IFA job ?
The children are below the income tax threshold (aka non taxpayers sorry for the misunderstanding). The money paid to them will not be from me but from trust fund capital,rental income about £10k PA after fees and just share dividends until we sell the last few holdings when they go back up (BT and a few other blur chip co's).
For IHT purposes i forewent about the £100k of my late wife's 'inheritance' due to 'quick succession' rules or something when she died (her dad died 14 days before her) to hopefully reduce any possible future tax liability going forward (but anything could happen in life).
I'm just trying to ensure we fully utilise the kids tax free allowance bearing in mind trust gains are taxed at 45% I understand then reclaimed if tax is paid. Maybe I'm overthinking it but I still think it's an accountant job rather than an IFA job ?
Trusts pay tax at the highest relate so 45% on income.
They typically only have a half allowance for CGT and then highest rate again, which could still be 28% if you hold property directly as I understand things. 20% is more typical on investment assets.
Holding direct property in trust is therefore usually not advisable from a tax perspective. No Principal Residence exemption as it's the trusts and large amounts of tax generated from the income and any capital return.
An IFA could suggest ways to mitigate the amount of tax the trust pays on an ongoing basis. For example the use of non income producing assets such as offshore bonds, but the current tax liability is still there while you hold the property..
Do you have to pay out to the kids? If they're minors your options as to what they can hold are very limited. Maybe better retaining the funds in the trust and restructuring the assets and their structure.
You need some decent advice on the specifics.
They typically only have a half allowance for CGT and then highest rate again, which could still be 28% if you hold property directly as I understand things. 20% is more typical on investment assets.
Holding direct property in trust is therefore usually not advisable from a tax perspective. No Principal Residence exemption as it's the trusts and large amounts of tax generated from the income and any capital return.
An IFA could suggest ways to mitigate the amount of tax the trust pays on an ongoing basis. For example the use of non income producing assets such as offshore bonds, but the current tax liability is still there while you hold the property..
Do you have to pay out to the kids? If they're minors your options as to what they can hold are very limited. Maybe better retaining the funds in the trust and restructuring the assets and their structure.
You need some decent advice on the specifics.
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