Sports
Life’s Too Short To Bother With IHT Avoidance
http://www.ft.com/cms/s/0/63b73472-d36d-11e2-b3ff-00144feab7de.html#ixzz2X2FlNRb4 By Jonathan Eley Ways of avoiding it are generally not worth it How’s this for a business proposition? You invest a minimum of £25,000 into a new and unquoted company that promises to develop renewable energy projects. It is targeting an annual return of 6 per cent return, but will incur costs of up to 2.5 per cent. There’s also a 2.5 per cent initial charge, and the investment will only be accessible through a professional adviser, who doubtless will not be working for free either. Framed in those terms, it doesn’t sound particularly compelling, does it? The likely net return of 3.5 per cent is broadly comparable to the yield on the FTSE 100. Why put a fixed sum into an unquoted start-up venture with fairly stiff charges when you could put money into a tracker fund with rock-bottom costs, get the same net return just from the dividends paid by Britain’s largest and most financially secure companies, hopefully enjoy some price appreciation, and be able to sell any time you want? The answer is that money in the tracker fund would not be shielded from inheritance tax, which is the primary purpose of Albion Community Power, the product described above. Backed by Albion Ventures, once part of Close Brothers, it launches this week and aims to raise £25m from individual investors. It will be chaired by the Conservative MP Tim Yeo, a former energy minister who this week stepped aside as chairman of the Commons energy committee while allegations of influence-peddling are investigated. Albion says it has done lots of research that shows how worried people are about inheritance tax – of the 2,000 individuals it polled, 61 per cent had already taken advice about how to mitigate IHT, or planned to do so. Based on its figures, it estimates that over a million households expect to leave an average inheritance of more than £613,000. It proposes a “solution” to inheritance tax by utilising business property relief, which exempts qualifying investments from inheritance tax once they have been owned for two years or more. This is the same relief utilised by various other IHT avoidance ruses, such as shares quoted on the Alternative Investment Market, Enterprise Investment Schemes, farmland, forestry and so on. However, there’s a big snag with business property relief. It’s designed to facilitate the transfer of real businesses from one generation to another without incurring huge tax bills, or the funding of new growth companies. It’s not really intended to allow the rest of us to avoid paying tax on the accidental accumulation of housing wealth, which is what many are now effectively using it for. Many of the ventures that qualify for BPR will by definition be small and risky with a higher than average chance of failure. Their shares may not be easy to trade – or may not be traded at all – so you or your heirs might not be able to sell when you want or the price you want. In short, they are probably the sort of investment that you should be avoiding towards the end of your life. ACP has lessened the risks somewhat by focusing on renewable energy, which is backed by a myriad of government subsidies and reliefs, many of which are inflation-linked, and where it has past form – Albion Ventures says its existing renewables projects are generating returns of 11 per cent. Still, there are many other ways to avoid inheritance tax, most of which don’t involve risky investments and don’t cost much. You could set up a trust and place assets within it. This allows you to retain some control over how those assets are used while they are in the trust, because settlors are allowed to be trustees (just not beneficiaries). The assets lie outside your estate, although they are not completely exempt from tax charges. You can also make gifts out of surplus income, provided you can prove that the gifts are regular and that your everyday standard of living is not affected. Better still, you can give money away while you’re still alive. That way, you get to influence how it’s spent, enjoy the gratitude of the recipients, and get a warm glow from knowing that you are boosting the economy and facilitating the transfer of wealth and property to younger generations at a time when they most need it. There are two main snags with these approaches, though. One is that you cannot change your mind. You cannot withdraw money from a trust, nor can you ask your nephew to sell that snazzy sports car he bought with your surplus income in order to pay for your long-term care. The other is the “seven-year rule” – for larger gifts to lie completely outside your estate, you generally have to soldier on for another seven years. So whichever way you do it, avoiding IHT involves a lot of risks, uncertainties and trade-offs. That’s no coincidence. You’re not meant to avoid it. The Treasury collected £2.9bn from IHT in the 2011/12 tax year, and expects that figure to rise to £4.1bn in 2017/18 (see chart). No wonder the Conservatives, who in opposition advocated a nil-rate band of £1m, have now frozen the allowance at £325,000 until 2018, thus ensuring that more people will end up paying it. Is avoiding IHT really worth the bother? I’d say not. IHT is primarily a tax on wealth accumulated by accident, usually via an asset which is, stamp duty aside, largely untaxed elsewhere in the system. There is already a large nil-rate band and transfers between spouses are exempt. If you’re that worried about IHT, don’t wait to become a millionaire corpse: downsize and donate while you’re still alive. After all, you can’t take it with you. jonathan.eley@ft.com Continue reading
Capturing the plight of Syria’s refugees
Capturing the plight of Syria’s refugees Sarah Young / 23 June 2013 From an elderly woman forced to watch the murder of her husband, to the young man who suddenly finds himself a father of three — a new photography exhibition opening in Dubai this week hopes to open people’s eyes to the heartbreaking effects of civil war on the Syrian people. Victims of War, an exhibition featuring the work of Hermoine Macura, a Dubai-based Australian journalist who has worked in the Middle East for 12 years, will be on display at Pro Art Gallery from June 25. Macura said the non-political and non-governmental project, with its focus on highlighting humanitarian crises and suffering in Syria, was the hardest and most heart-breaking work she had done in the Middle East. The photos were taken in late December last year and early January, mainly at the Zaatari refugee camp in Jordan, near the town of Masraq about 30 to 50 kilometres from Syria, where thousands of refugees were arriving daily, she said. “Children with special needs, people in wheelchairs, people having to be carried over the border, elderly…like a swarm through the sandstorms…imagine a sandstorm in Dubai times ten. You could barely see. “Some women were giving birth on the border with no medical care.” But what troubled her the most were the sexual and gender-based crimes against women. “Some women were tortured and raped with animals and rodents. Girls as young as 10, 11, 12 raped, tortured and mutilated. I have never seen such extreme cases of torture like this in the Middle East, even when I was in Iraq. Humanitarian organisations had to bring in psychologists and counsellors to deal with the trauma, she said. “The cultural shame and embarrassment attracted to (rape) made it very difficult for people to seek medical treatment…many were suffering in silence. “As an outsider it was just shocking. We don’t get to see how people really suffer. We get desensitised, and there’s nothing focused on highlighting this. It took a long time to digest what she had seen. “Every single person stays in my eyes, heart and mind. “When you see things like this, it makes you more sensitive to choosing diplomatic solutions over war…everyone is so quick to take that option (of war), especially when you live in priviledged societies where you’re safe and secure, but they don’t realise the consequences, the damage on generations of people and how it affects society as a whole. While those living in the UAE were blessed, people living in other parts of the Arab world were not. “I really don’t know what will happen to them. If you look at Iraq before the Gulf War, it was a very rich country, and if you go there now the Iraqi people are in poverty. A lot of women are turning to prostitution.” Eighty per cent of the refugees she saw were women and children. “In any situation of lawlessness, the women and children are going to suffer the most. “When you break the woman you break the society. She’s raising the children, holding everyone and the community together.” While she saw very few men, she could vividly recall one who had adopted the children of his two brothers who had been killed, and taken them across the border. “This was a single, unmarried man who was now a father of three children at 25 years old. He took these kids across the border and is now in a camp trying to plan or work out how do you move on from this.” Another face which stuck with her was that of a woman in her 80s. “Gangs came to her house. They killed her husband and burnt her house to the ground in front of her. She has nothing. She came across that border by herself. It was unusual to see elderly people being attacked in the Middle East, she said. “People work their whole lives for their home. Now she’s got nothing. She said ‘I can’t stay here because this is not my country. But there’s nothing for me at home either. I don’t know what to do’. “My camera man had to stop shooting because he was crying. It was so, so sad.” The two images that stuck with her the most, though, were of children. The first is of three disabled boys, standing in a desert storm trying to close their jackets with what was left of their arms. “They were like scarecrows on the rocks. To see young lives just blowing or withering in the wind…it was very disturbing. “This was the first project where I got to see how children and people with special needs suffered…there were not enough wheelchairs, kids had to sit on the floor or in a makeshift box with wheels.” The other image was of a little girl, about nine, outside a medical facility waiting for treatment. “It was the determination in her face…I felt that was a ray of hope. I could feel the spirit of the Syrian people in that young girl…who had come by herself, and was still holding it together. I just hope when people see these images they can see the humanitarian crisis, (but also) the people — that there is hope too, not just suffering.” The UN’s refugee agency UNHCR, medical staff, and volunteer camp workers, were doing an “amazing job”. “(UNHCR have) poured $1 million into refugee camps in Lebanon, Jordan and Turkey. “Compared to what the Palestinians had to endure in the camps in Lebanon, this is really good. The shelters and tents are like little villages, housing more than 100,000 people. She said she was impressed with the high donations being made by Saudi Arabia and the UAE, even though the countries did not shout about it. Expert doctors also flew in every ten days from the Gulf states and some children were flown to GCC countries for specialised surgery, she said. “So in that darkness, there was some hope that came to light…some kids were born with a club foot but were so poor, or lived in such remote parts, they had never been able to be treated. And now they could be.” According to the UNHCR website, more than 1.6 million Syrian refugees are being hosted in foreign countries, with the majority in Lebanon and Jordan — and more than one million of those arrived in the first five months of 2013 alone. Women and children make up three-quarters of the refugee population. If current trends persisted, it could be expected that more than three million Syrians would have left their country by the end of this year, the website said. The exhibition will be going to Qatar and New York with all profits being donated to humanitarian organisations such as UNHCR. It opens at 7pm on June 25 and runs until July 15, at Pro Art Gallery in the Palm Strip Shopping Mall on Jumeirah Beach Road, Jumeirah 1. See www.victimsofwar.ae . sarah@khaleejtimes.com Continue reading
Training in UAE for a hot run in the US
Training in UAE for a hot run in the US Sarah Young / 23 June 2013 The UAE is the perfect training ground for one extreme runner who will traverse hundreds of kilometres in searing heat in the United States next month. Dubai resident Dr Catherine Todd, 34, will run the Badwater Ultra-Marathon from July 15 to 17 in Death Valley, California, despite vowing to a friend after last year’s race never to do it again. Known as the world’s toughest footrace, runners on the 217km course scale a cumulative elevation of about 4,000 metres from the hottest, driest place in North America to Mount Whitney, the highest summit of continental United States. It has to be completed within 48 hours. The assistant professor at the University of Wollongong in Dubai, who focuses on biomedical engineering research, is no stranger to long distances, having run from Dubai to Fujairah last year, and completed ten 160km marathons and three 217km marathons. She has been in training for this invitation-only event, which takes 100 runners each year, since completing the same race last year, in a time of 36.5 hours — despite having a cold and ear infection. This year, she hopes to be the fastest woman on the course, aiming to complete it in under 30 hours. She will also be raising funds to help friend Richard Holland who was hit by a car in a “horrific accident” while cycling in Dubai last year. “He’s been taken back to South Africa, but the rehab costs are enormous.” Holland, who is in his early 30s, was now unable to speak, but had begun communicating with his mother by blinking, she said. “The worst thing is it could have been any of us out there. Richard was the safest cyclist we know.” Todd has just returned from a 13-hour, 160km trail run in Ohio, giving her some variety from her usual training regime here which involves road, desert and mountain runs, including back-to-back ascents of Jebel Hafeet, on the outskirts of Al Ain, starting at 3am. She trains between two to four hours each day, with a long run between five and 10 hours on the weekend. “I try to fit in a lot in my life…I believe you make time for the things you’re interested in — you’ll get up early and manage your time effectively. I don’t go out and party every night so that helps.” The UAE was the perfect training ground, she said. “I’m really lucky as a lot of people don’t have that exposure to the heat,” she said of the 55 degree heat. “Death Valley is absolutely horrible… hot, dry, barren. There’s a long stretch of asphalt which everyone hates and you have to run on for a very long time. “It’s like being out on the roads out of Dubai, quite rocky and deserty. “The issue in the dry heat is the sun piercing your skin. Throw some sand and a hot wind in there and it can really destroy your soul. It’s important to have very positive people in your crew.” Staying mentally positive during the race was incredibly important. “Your feet get trashed. It’s tough on your msucles, your whole body aches by the end, you’ve just got to push through the pain. But it’s not all downs…there’s highs as well.” Along with getting enough fluids, the biggest challenge would be forcing down food while running, including avocado on crisps, soup, lentils, salads and rice, and plenty of electrolyte drinks. Todd, who has lived in Dubai for seven years, got into marathon running at the university and was then inspired by a friend at a running club in Dubai to try out ultramarathons. “He told me about all the adventures he had, and I thought it sounded more interesting than just putting your head down and running a marathon to get a good time. It’s more of a challenge to finish…what will go wrong and how to deal with challenges as they arise. It’s also a good way to travel, and you meet a lot of people from different parts of the world.” sarah@khaleejtimes.com Continue reading
