To investors, U.K. land and inheritance tax structures can be a golden opportunity.
Most UK investors in land and other assets wish to minimise the tax burden to their heirs. There are means to accomplish this — and to realise tax deductions.
Taxes on land investments in the U.K. are unquestionably complex, as much as they are in most parts of the world. Part of the country’s history with real estate includes intentionally attracting outside investments (from non-citizens and non-residents) as a means of furthering investment and development.
The country’s Inheritance Tax (IHT) structure has been in place since 1986, and includes a spousal exemption that hinges on a transferable nil rate band policy. It allows for surviving spouses and civil partners to receive up to 200 percent of the nil rate band, from which they can distribute asset value (or cash) to relatives. The nil rate band is adjusted for inflation, last established for the 2010-2011 tax year at £320,000 and will be reconsidered for increase in April 2015. Up to that amount the tax is 0 percent, while value above it proceeds are taxed at 40 percent.
Following is a collection of how the tax structure affects land investors, starting with rules that apply to inheritances:
• For UK residents, taxes apply to inheritances of UK land, as well as property income, gains and transactions of real property. This can include rental income from property, profits, rent and capital gains.
• Non-residents of the UK are not subject to a tax on capital gains from UK assets, including land.
• “Moveable” (non-land) and “immoveable” (land and mortgages) investments are treated separately under UK inheritance tax statutes. Upon a landowner’s death, where the property is located falls under the rule of lex situs (laws that apply to the location). Even if the deceased had lived in France for ten years, his or her land in the UK is taxed according to UK statutes. Only the moveable assets (e.g., art, jewelry, securities outside of the UK, etc.) are free from UK IHT.
• Marriage does not make the spouse an automatic co-owner of the property of the property. Only if the spouse is written into the property title does he or she continue to own it without paying IHT upon the death of the other spouse.
• A landowner can give away land, within limits, while still living as long as it is not done to avoid the claims of creditors. All rules regarding IHT transfer taxes apply.
Some applications of real property actually result in tax deductions. For example, gifting of farmland under the provisions of the Agricultural Property Relief can provide tax deductions for the benefactor in the tax year in which the gift is made. Donations of assets including real assets such as land to a UK-registered charity can also provide deductions to the benefactor. Individuals who elect to sell property to a home reversion plan, an Equity release scheme, are allowed to write the income stream proceeds into a trust for beneficiaries by way of a life insurance policy.
What Is An Option?
In the world of options trading, there are many terms and concepts that are often misunderstood. Terms such as put option, call option, weekly options, derivatives contract, spread trade, and the list goes on and on.
One of the more common concepts that is misunderstood is the stock options contract.
What Exactly Is a Stock Option Contract?
While it may seem confusing at first glance, it is actually far simpler than it is made out to be.
Let’s start with a very basic definition of what an option is: An option gives the buyer the right but not the obligation to buy or sell the underlying at a certain price by a certain date in the future.
That is exactly what an option is – the option to be long or short the underlying at a certain price by a certain date in the future. This type of contract is always based on an underlying contract or shares.
In the case of stock, one contract equals 100 shares of the stock. In futures, it equals one contract of the underlying future.
Options Have Set Price Levels Called Strike Prices
Options always entail a specific price which is called the strike or striking price. This strike price is the price at which one may have the right to buy or sell the underlying contract.
The strike price is often referred to as the exercise price. Some underlying contracts will have more strike prices than others. Inexpensive stocks for example, may have strike price increments of $2.50 while more moderately priced stocks may have increments of $5.00 with very expensive stocks having even larger increments.
Let’s look at an example: Let’s suppose that an investor is trading shares of XYZ which is currently trading at $25 per share.
Let’s further suppose that this investor believes that the shares may rise in the near future but does not want to commit the necessary capital to buy the shares outright.
The investor may elect to purchase a call option instead. In this particular case, the investor may elect to purchase the front month $27.50 call. This call contract would give the investor the right but not the obligation to buy the shares or be long the shares from $27.50 at any time until expiration.
Let’s assume that after the investor buys this call contract that the shares skyrocket to $30 per share. If the investor has the right to be long from $27.50, then the investor would be looking at a gain on the shares of $2.50 per share minus whatever premium he or she paid for the call.
Although we will address call options and put options more specifically in a future article, it is very important that one have a thorough understanding of how these contracts work before looking to utilize them.
Options Always Have An Expiration Date
When an option is listed, it will always have an expiration date.
There are many different types of expiration dates these days, and likely more will be introduced in the future. Different stocks and different products may also have differing expiration dates.
For example, most heavily traded stocks will have options that expire each month. These options expire on the third Friday of each month. Some stocks will also have end-of-month options listed as well as weekly options listed.
The point is that every option has a finite lifespan.
Because options have a finite lifespan, an option will experience time decay otherwise known as theta decay during the course of its life all else remaining equal. Theta is one of the more well-known option Greeks and must be well understood in order to use options.
Why do options have an expiration date? Well, one way to look at an option contract is a leveraged transfer of risk.
In many regards, the idea of an option contract is similar to an insurance policy.
When one buys an insurance policy, there is always a time frame attached to it. Many policies must be renewed each year. During the policy term, you pay the insurance company a premium to assume the risk of loss during that time period. Once the term expires, the insurance company is no longer assuming that risk unless the policy is renewed and another premium is paid.
Options are very similar in that the seller of an option assumes the risk of a stock or underlying contract making a specific move. The option seller, like the insurance company, is paid a premium. Once that option expires however, the option seller is no longer assuming the risk.
Options Can Be In, Out, or At-The-Money
When looking at options contracts, a contract may be in-the-money, out-of-the-money, or at-the-money.
An in-the-money option is an option whose strike price is above or below the current price of the underlying. For example, if shares of JJJ are trading at $50 per share and one owns the $45 call, that call option would be considered in-the-money because the shares are already trading above the strike price.
Using the same example, if one owns the $50 call option, that option would be considered at-the-money because it is at the level that the underlying shares are trading at currently.
Finally, the $55 call option would be considered out-of-the-money because the underlying shares are not at or above the strike price of $55.
An Option’s Value Is Known As The Premium
When options are traded, the value of an option is known as the premium. This premium is the price at which one can buy or sell the option.
In other words, when an investor wants to buy the right but not the obligation to buy or sell a stock at a certain price by a certain date in the future, he or she will pay the option seller a premium. If the option expires worthless, then the seller keeps the premium.
Option premiums can have fairly narrow or fairly wide bid/ask spreads. These are often quoted by market makers whose job it is to make a market in that particular option.
Market makers look to profit from the ability to buy the bid and sell the offer. The investing public however, does not have this ability and when trading options will likely buy the offer or sell the bid or perhaps transact somewhere in between these levels.
Option contracts that trade for smaller premiums such as less than $3.00 will often trade in $.05 increments while options trading at larger premiums will trade in increments of $.10.
There Are Two Types of Option Value
Option contracts consist of two types of value which are known as intrinsic and extrinsic.
Intrinsic value is the option’s value derived from being in-the-money while extrinsic value is derived from the option’s time value.
Options may consist of both types of value at the same time, or may consist entirely of one or the other.
For example, an out-of-the-money option will consist entirely of extrinsic or time value while a deep in-the-money option will consist of almost entirely intrinsic value.
There Are Many Option Based Strategies Available
Options contracts may be bought, sold, or be bought and sold in various combinations.
There are two types of options contracts which are known as a call option and a put option.
Using these two different types of contracts, a variety of option strategies may be created and utilized to attempt to hedge existing positions, make a directional bet on a stock or market, or take advantage of the passage of time by trying to profit from time decay.
One of our favorite methods is to utilize an option income strategy that can provide a very low risk way to generate consistent income from the market with very little trade maintenance required and a very high probability of success.
Emerging markets simply refers to the BRICS countries.
The term covers so many more markets that just Brazil, Russia, India, China and South Africa. Further countries are seeing an economic transformation, including the Philippines, Indonesia, Nigeria and Ethiopia (or ‘the PINEs’). Fueled by a growing middle class and strong economic performance, as well as advances in technology, improved healthcare and education, these countries are experiencing their own business boom.
Only big businesses can succeed in emerging markets
It is easy to assume that only large, well-known companies can survive the move into emerging markets. This is not the case. Smaller businesses have the opportunity to become part of a developing economy, to provide consumers with new services on a more personal level and to work with local companies to expand alongside the country’s economic infrastructure.
Internet penetration is too low for online growth.
Internet penetration in developing countries is increasing every day, with the smartphone adoption rate growing nearly twice as fast in emerging markets as it is in more established markets (KPCB). In the Middle East, 95% of Jordanians now own a cell phone, and in a recent study, Jordan ranked second in Internet usage in the Arab world.
Emerging markets are just too risky.
There are always risks to consider when investing in a new market, however developing countries provides exciting, new investment opportunities. For example, in Emerging Trends in Real Estate Asia Pacific 2014, a joint report from the Urban Land Institute (ULI) and PwC, the Philippines’ capital of Manila was ranked in the top five cities in the region for its investment potential.
It’s all hype.
These increasingly buoyant economies are creating great potential for businesses. As underdeveloped countries become more developed economies, businesses have reason to be extremely enthusiastic. Whilst there are challenges that must be taken into account when strategizing a move into an emerging market, vast opportunities are being created – as long as strongly researched decisions are made and realistic strategies are in place.
The important thing is to ensure you do research using the internet and also from stories published concerning development in countries of your choice. You can get more information from online journals also.
Are you willing to invest in a more long-term and reliable organic traffic source for your website? Then let’s look at a search engine that can assist you in increasing your traffic.
Interview an Influencer or Get Interviewed by a High-traffic Website
Have you heard of Tim Ferriss, the author of the Four-Hour Work Week?
His podcast is nowadays a staple content type that he provides to his viewers. Tim’s show has world-class performers who share their insights on a variety of topics, and he is well-liked on social media. Do Tim’s fans enjoy the show? So far, the show has received over 50 million downloads. On most days, it’s the most popular business podcast on iTunes.
Interviews, whether on video or audio, are inherently conversational, lively, and engaging. The great aspect is that it’s a win-win situation for both sides. The interviewer is exposed to a new audience, while the interviewee is able to provide his website visitors with new fascinating and authoritative information. You can ask an industry influencer to share your interview with their followers on social media if you interview them. Consider the organic traffic you’ll get from their social media followers, which number in the hundreds of thousands. Consider the level of interest generated by a prior Derek Sivers interview on the Tim Ferriss Show. Derek shared the show’s URL with his 283K followers on Twitter. It won’t hurt if you establish a relationship with the influencer as a result of the interview.
Similarly, being interviewed by a high-ranking website can result in a significant increase in search engine traffic. Harsh Agrawal’s blog, Shoutmeloud, received 35,000+ views in a single day after he was profiled by YourStory. That was the blog’s most popular search engine traffic source (with 600,000+ monthly visitors). Because interviews provide consolidated value, they can be used as a long-term lead generating source for your company. Consider how many bloggers you’ve learned about through interviews on YouTube and other high-authority websites.
You may also conduct a Reddit AMA if you have a very compelling storey to tell. Mateen’s AMA got about generating $85,000 in profit by selling TeeSpring shirts/hoodies received 2000 page views. He also boosted the number of visitors to his website on a daily basis.
By registering as a source with HARO, you can also answer queries from journalists. On HARO, Christopher from Snappa came across this question from Inc Magazine about the future of content marketing. He swiftly responded with a thorough response. He was mentioned in Inc a few weeks later as a result of this. HARO is an excellent strategy to have your brand mentioned on authoritative news sites such as Entrepreneur and Inc. Those backlinks will enhance your search engine traffic and increase your marketing strategy by improving your reputation in Google’s eyes. Contact an SEO agency to find out how you can do this and how they can manage it for you while you work on the bottom line of your business.