Property In Malaysia, Is The Bubble About To Burst ?


Next year is expected to be another flat and challenging period for the real estate market, with the issue being the lack of affordability which remains unresolved. Although overall consumer sentiment has improved and asking prices have come down, the key issues of affordability overhangs  high-rise homes, rising cost of living and tight financing and this will have a dampening effect.


In 2018, properties are expected to remain unaffordable at 4.4 times the median income in Malaysia, with the number expected to be even higher in key urban locations like Kuala Lumpur and Penang. Despite higher gross domestic product (GDP) projected for 2017 and a slight recovery in crude oil prices, the property industry is still hampered by various factors. Higher GDP does not necessarily mean higher wages and disposable incomes for the B40 and M40 segments.


Properties remain out of reach for many Malaysians due to the gap between asking prices in both the primary and secondary markets. B40 refers to the bottom 40% of households with a monthly income of below RM3,900 while the M40 group has household income ranging between RM3,900 and RM8,300. The country’s real estate market is still correcting itself, with a steady downward trend.



It sees possible marginal drops in real estate prices in Kuala Lumpur, Selangor and Penang. The recent bad floods in Penang are expected to have minimal effect on prices in the long term. On improving the supply of affordable homes, one key finding was the possibility of making it compulsory for developers to build affordable homes in their projects, similar to the statutory requirement to allot Bumiputera homes. A gradual improvement in overall consumer sentiment is expected to continue next year.


Similar to the ‘Ripple Effect’ in London there will greater interest in landed suburban properties located some distance from the city centre, particularly those on the outskirts of Selangor. Emerging hotspots, such as Rawang, Shah Alam North, Setia Alam, Ijok, Semenyih and Kota Kemuning, these are expected to continue gaining momentum as the infrastructure improves in the coming years.


According to Deputy Finance Minister Lee Chee Leong, the number of unsold completed residential units are up 40% to 20,807 units in the first half of 2017 compared with the same period last year. These units are worth RM12.26 billion with condominiums and apartments costing over RM500,000 dominating the unsold homes in Malaysia.


Ernest Cheong, who is a property expert, pointed out that the RM12.26 billion is only from the primary market, which includes launches by developers, it does not include the secondary sale market. With the amount of units unsold it means that developers are in danger of losing their bridging finance from banks as they may fail to hit the sales target because consumers can’t afford to buy the properties. Thus, he predicted that property markets will crash within 24 to 30 months if this situation continues. If the property crash comes early next year, Cheong expects the prices of houses to fall from RM500,000 to RM300,000 and advised Malaysian consumers not to commit to buying a home unless they could save up to RM1,000 a month for at least a year.


In addition, oversupply of property would be exacerbated as there are about 140 malls entering market in key states by 2021. This will potentially become more severe than during the Asian Financial crisis in 1997.


According to the International Monetary Fund, historically housing booms have been followed by busts about 40% of the time, which is associated with longer economic downturns and larger output losses compared to equity market.


Given that there are imbalances in both residential and commercial property segments, Bank Negara in its report, said this is a source of concerns as the property sector has linkages to more than 120 industries, collectively accounting for 10% of Gross Domestic Product and employing 1.4 million Malaysians. Any severe property market imbalances and overbuilding will affect the stability of the financial system.


The central bank had raised this issue to banking institutions and the exposure of the financial institutions on this sector was still at prudent level but property oversupply could impact other sectors. This could pose risk to macroeconomics and financial stability of Malaysia.


The Chinese government has prohibited direct individual investment in overseas property projects, but there are numerous ways to skirt around these restrictions so money coming in from mainland China will still be a positive for Malaysian property but Malaysia cannot just rely on this if they are to be a fully-fledged developed nation.


Malaysia’s population is still growing so demand is still good BUT there is a huge gap between earning capabilities and first time buyers and new families will have to look very carefully over the next few years on whether they can buy instead of renting or living with family.


In long run, I feel Malaysian property prices will stay stagnant and rental income will drop due to the choice and over supply, we have seen high end property slightly decrease in value over the last few years and until the market has more demand will stay relatively flat. Unlike Tokyo, Hong Kong, Singapore, Shanghai, Kuala Lumpur has vast amounts of space to still build properties so comparing the like for like is unrealistic and expectations of large capital growth is not imminent.


Malaysia economic outlook may look more positive if the oil price increases in next few years, this in turn will bring in more expatriate workers, boost rental returns for owners and start creating demand for both local and foreign investors. However, currently there is a little skepticism within the market because of the general election next year which may bring even more changes.


Have a good day

All the best



Farringdon Group

+60 3 2026 0286

Week 47 In Review










  • German coalition talks fail, snap election possible
  • United Kingdom mulls €40 billion Brexit payment
  • European economy powers ahead
  • Yellen: Low inflation a “mystery”


Global equities were modestly higher on the week amid strong global economic momentum. The yield on the US 10-year Treasury note was little changed, at 2.33%, but the price of a barrel of West Texas Intermediate crude oil rose to the highest level in over two years, at $58.75, aided in part by a pipeline shutdown.

Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), drifted lower this week, falling to 9.8 from above 11 last week.


Pressure mounts for German grand coalition

Talks between Chancellor Angela Merkel’s Christian Democratic Union (CDU), the Greens and the Free Democratic Party (FDP) broke down on Sunday evening, throwing Germany into a nearly unprecedented political crisis. As a result, German president Frank-Walter Steinmeier has appealed to the center-left Social Democratic Party (SPD), the second largest vote-getter in the 24 September general election, to form a grand coalition with Merkel’s party.

SPD leader Martin Schulz has thus far declined to join a coalition, believing that being a coalition partner in the previous government hurt his party at the polls in September. Steinmeier has appealed to Shulz to reconsider for the good of the country. If the SPD does not acquiesce, fresh elections in early 2018 seem likely.

UK floats Brexit payment

At a mid-December summit, the European Union will determine whether sufficient progress has been made in three key areas in order for talks to advance on a second track on the future trade relationship   between the two sides. The three areas of critical importance to the EU are the rights of EU citizens residing in the United Kingdom, the “divorce bill” payment the UK will pay as it leaves the EU and the thorny issue of how to deal with the border between Northern Ireland and the Irish Republic.

In an effort to advance negotiations, the UK government has floated payment figures of as much as €40 billion. Press reports indicate that EU officials have received the overture positively. Of the three policy areas, the border of Northern Ireland is seen as the most difficult to settle. Complicating that delicate issue is the precarious state of the Irish Republic’s government, with the country’s deputy prime minister embroiled in scandal.

Europe continues business boom

Flash readings of November purchasing managers’ indices in the eurozone show that the manufacturing and services sectors had their best combined month since April 2011. Forward-looking indicators, such as unfilled orders, were particularly robust, suggesting growth will continue in the months ahead.


Yellen mystified by low inflation

In what will likely be one of her last public appearances as chair of the US Federal Reserve, Janet Yellen said this week that the challenge the Fed faces is how to craft a monetary policy that maintains a strong labor market while also moving inflation back up toward the Fed’s 2% target.

Yellen expressed surprise at the low levels of inflation in 2017, given low unemployment figures and stable prices for the dollar and oil. Yellen’s term ends on 8 February, and she recently announced that she will resign from the Board of Governors upon the confirmation of Jerome Powell as her replacement as chair.


Mon, 27 Nov

United States  New home sales

Tue, 28 Nov

US Wholesale inventories, Case-Shiller home price index

US Fed’s Powell confirmation hearing

Wed, 29 Nov

Eurozone Consumer and business sentiment

US Q3 gross domestic product, pending home sales

Thu, 30 Nov

US Personal income and spending

Fri, 1 Dec

Global Manufacturing purchasing managers’ indices

Canada                 September gross domestic product


All the best and have a great week



Farringdon Group

+60 3 2026 0286

Summary of The UK’s Budget 2017












I have highlighted the points that may affect people

Stamp duty and housing

  • Stamp duty to be abolished immediately for first-time buyers purchasing properties worth up to £300,000
  • To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first-time buyers will be exempt from stamp duty, with the remaining £200,000 incurring 5%.
  • 95% of all first-time buyers will benefit, with 80% not paying stamp duty
  • Reduction will apply immediately in England, Wales and Northern Ireland although the Welsh government will have to decide whether to continue it when stamp duty is devolved in April 2018
  • It will not apply in Scotland unless Scottish government decides to follow suit
  • £44bn in overall government support for housing to meet target of building 300,000 new homes a year by the middle of the next decade
  • Councils given powers to charge 100% council tax premium on empty properties
  • Compulsory purchase of land banked by developers for financial reasons
  • £400m to regenerate housing estates and £1.1bn to unlock strategic sites for development
  • Review into delays in developments given planning permission being taken forward
  • £28m for Kensington and Chelsea council to provide counselling services and mental health support for victims of the Grenfell fire and for regeneration of surrounding area
  • New homelessness task force


Alcohol, tobacco and fuel

  • Tobacco will continue to rise by 2% above Retail Price Index (RPI) inflation, equivalent to 28p on a pack of 20, while the minimum excise duty on cigarettes introduced in March will also rise
  • Duty on hand-rolling tobacco will increase by additional 1%
  • Duty on beer, wine, spirits and most ciders will be frozen, equating to 1p off a pint of beer and 6p of a typical bottle of wine
  • But duty on high-strength “white ciders” to be increased in 2019 via new legislation
  • Fuel duty rise for petrol and diesel cars scheduled for April 2018 scrapped
  • Vehicle excise duty for cars, vans and motorcycles registered before April 2017 to rise by inflation
  • Vehicle excise duty for new diesel cars not meeting latest standards to rise by one band in April 2018
  • Tax hike will not apply to van owners
  • Existing diesel supplement in company car tax to rise by 1%
  • Proceeds to fund a new £220m clean air fund for pollution hotspots in England


The state of the economy

  • Growth forecast for 2017 slashed from 2% to 1.5%
  • Forecasts for 2018, 2019, 2020 and 2021 revised down to 1.4%, 1.3%, 1.5% and 1.6% respectively.
  • Productivity growth revised down by an average of 0.7% a year up to 2023
  • Annual rate of CPI inflation forecast to fall from peak of 3% towards 2% target later this year
  • Another 600,000 people forecast to be in work by 2022
  • £3bn to be set aside over next two years to prepare UK for every possible outcome as UK leaves EU


The state of the public finances

  • Annual government borrowing £49.9bn this year, £8.4bn lower than forecast in March
  • Borrowing forecast to fall in real terms in the subsequent five years from £39.5bn in 2018-19 to £25.6bn in 2022-23.
  • But projected borrowing has been revised up for 2019-2020, 2020-2021 and 2021-22, compared to March, due to the weaker economic outlook and expected lower tax yields
  • Public sector net borrowing forecast to fall from 3.8% of GDP last year to 2.4% this year, then 1.9%, 1.6%, 1.5% and 1.3% in subsequent years, reaching 1.1% in 2022-23.
  • Debt will peak at 86.5% of GDP this year, then fall to 86.4% next year; then 86.1%, 83.1% and 79.3% in subsequent years, reaching 79.1% in 2022-23.


Welfare and pensions

  • £1.5bn package to “address concerns” about the delivery of universal credit
  • Seven-day initial waiting period for processing of claims to be scrapped
  • Claimants to get 100% advance payments within five days of applying from January
  • Typical first payment will take five weeks rather than current six
  • Repayment period for advances to increase from six to 12 months.
  • New universal credit claimants in receipt of housing benefit to continue to receive it for two weeks


Business and digital

  • VAT threshold for small business to remain at £85,000 for two years
  • £500m support for 5G mobile networks, full fibre broadband and artificial intelligence
  • £540m to support the growth of electric cars, including more charging points
  • A further £2.3bn allocated for investment in research and development
  • Rises in business rates to be pegged to CPI measure of inflation, not higher RPI, a cut of £2.3bn
  • Digital economy royalties relating to UK sales which are paid to a low-tax jurisdiction to be subject to income tax as part of tax avoidance clampdown. Expected to raise about £200m a year
  • Capital gains tax relief for overseas buyers of UK commercial property to be phased out, with exemptions for foreign pension funds
  • Charges on single-use plastic items to be looked at
  • £30m to develop digital skills distance learning courses


Education and health (England only)

  • £40m teacher training fund for underperforming schools in England. Worth £1,000 per teacher
  • 8,000 new computer science teachers to be recruited at cost of £84m and new National Centre for Computing to be set up
  • Secondary schools and sixth-form colleges to get £600 for each additional pupil taking maths or further maths at A-level and core maths at an expected cost of £177m
  • £2.8bn in extra funding for the NHS in England
  • £350m immediately to address pressures this winter, £1.6bn for 2018-19 and the remainder in 2019-20
  • £10bn capital investment fund for hospitals up to 2022
  • No extra funding for nurses pay but a guarantee that if future pay rises are recommended by independent body, there will be new money



  • £320m to be invested in former Redcar steelworks site
  • Further devolution of powers to Greater Manchester
  • £1.7bn city region transport fund, to be shared between six regions with elected mayors and other areas
  • £30m to improve mobile and digital connectivity on TransPennine rail route.
  • £2bn for Scottish government, £1.2bn for Welsh government and £650m for Northern Ireland executive
  • Scottish police and fire services to get refunds on VAT from April 2018
  • Young person’s railcard extended to 26-30-year-olds, giving a third off rail fares


Have a good day

All the best



Farringdon Group

+60 3 2026 0286

UK Expat Issues – Residency, Domicile & Tax












As you have seen in the news lately things are changing in the UK not only to combat money leaving the UK but to also combat tax evasion. There is a misconception that tax avoidance is the same as Tax evasion, it’s not.


Definition of Tax Evasion

“Income tax fraud is the wilful attempt to evade tax law or defraud. Tax fraud occurs when a person or a company does any of the following: Intentionally fails to file a income tax return. Wilfully fails to pay taxes due. … Makes fraudulent or false claims”


Definition of Tax Efficiency

“Tax efficiency is an attempt to minimize tax liability when given many different financial decisions. … Other options to reduce tax liability include taxefficient mutual funds, irrevocable trusts and tax-exempt commercial paper”


So, this is where things get interesting for all UK Expats as things get complicated, VERY COMPLICATED!


Take a look at the below Fact Sheet and have a think about what you will be doing, not now, but in a few years, will you go back to the UK to retire because of the NHS, because of family, most do believe it or not and then forget about everything, until it’s too late.


Legislation Changes

  • Legislation changes impacting on UK Expats , Non-UK residents with residential property and future UK resident

Are you:

  • Were born in the UK?
  • Frequently visit the UK and have ties to the UK?
  • Have residential property in the UK?
  • Plan to live in the UK but not born there?
  • Planned to return as a ‘Non Dom’?


UK Residency

As you live overseas and pay the jurisdictions taxes you live in you become a ‘tax resident’, this is not the same as ‘Resident’

We see this on many occasions and unfortunately people just DON’T know the correct way to calculate this

We hear;

I am not UK resident, I only spend the summer holidays there’ BUT,

  • If more than 16 days you CAN be UK resident


*Must look at number of days and ties to the UK to determine residence and exposure to the tax system


Residency, the Basics


For a UK tax liability to arise;

  1. HMRC use: The ‘Theme of ‘connecting factors to UK’ which means that there:
  2. Must be a UK source for the Income/Capital Gain


  1. Person must be UK resident


Historic UK Residency

This can be used but only for guidance as this is historical and reasonably ambiguous and things change





UK Residence Developments

The developments were brought in 2013 and without much advertising so previously were you could go by the 90 day rule these have been brought in;

  • Statutory Residence Test enables the tax payer to have more certainty since April 2013
  • Test based on connecting factors
  • Concept of ‘Ordinarily resident’ no longer used


Connecting factors – Residence

This has now become a 3 part test called ‘Connecting Factors’, where you are able to confirm/test your residency

  • Part A contains rules which if met confirm that the individual is non-UK resident
  • Part B has rules where if met a person would be considered to be UK resident
  • If neither Part A nor Part B apply, Part C looks at ‘connecting factors’ for tax purposes – too many and person could remain UK resident
  • Most UK expats will have ‘connecting factors’ to the UK, this is where planning is required


Statutory Residence Test 1

  • Part A of the test will conclusively determine that an individual is not resident in the UK for a tax year if they fall under any of the following conditions, namely they:
  • Were not resident in the UK in all of the previous three tax years and they are present in the UK for fewer than 45 days in the current tax year; or
  • Were resident in the UK in one or more of the previous three tax years and they are present in the UK for fewer than 16 days in the current tax year; or
  • Leave the UK to carry out full-time work abroad, provided they are present in the UK for fewer than 91 days in the tax year and no more than 31 days are spent working in the UK in the tax year


Statutory Residence Test 2

  • If Part A of the test does not apply, an individual will be conclusively resident for the tax year under Part B if they meet any of the following conditions, namely they:
  • Are present in the UK for 183 days or more in the current tax year; or
  • Have only one home and that home is in the UK (or have two or more homes and all of these are in the UK); or
  • Carry out full-time work in the UK


Statutory Residence Test 3

  • Where neither Part A or Part B apply conclusively, then the factors of Part C are used as the


‘Tie Breaker’


Tie breaker – Connecting Factors

  • Connecting Factors are:

– Family (defined as spouse, civil partner, common law partner and minor children) resident in the UK

– Available accommodation in the UK

– Working in the UK for 40 days or more days per tax year (working 3 or more hours a day constitutes a working day)

– Spending 91 days or more in the UK in either of the last two tax years

– Spending more time in the UK than any other single country

  • Also depends on whether you are an ‘Arriver’ or a ‘Leaver’


Connecting Factors – How Many Are Required?









Case Study – Arriver

Mr D is a businessman with homes in various countries. He has not been resident in the UK prior to 2015-16. He has business interests in the UK and owns a house in London but, until 2015-16, he spends only a few days in the UK each year. In 2015-16 his wife moves to the UK to live in the London house with their two children. His wife and children become resident in the UK.

The children enrol in local schools and Mr D visits whenever he can. He spends 95 days in the UK in 2015, 45 of them working. He stays in the London house on days when he is in the UK.


Mr D is resident in 2015-16 under Part C of the test. This is because he spends 91 days or more in the UK and has 3 connecting factors:

  1. A UK resident family;
  2. Accessible accommodation in the UK; and
  3. Substantive UK employment


Case Study – Leaver

Mrs E has been UK resident for several years, always spending more than 250 days per year in the UK. She has a successful IT company and now decides to create a new branch of the business in South Africa.

In 2015-16 she buys a house in Cape Town and spends a large amount of her time there. Until the new branch is established her family will remain resident in the UK and continue to live in the family home. She commutes back to the UK when she can, staying with her family when she does. She is in the UK for 93 days.


In 2015-16 Mrs E is resident in the UK under Part C as she spends 90 days or more in the UK and has 3 connecting factors:

  1. A UK resident family; and
  2. Accessible accommodation in the UK; and
  3. Spent 91 days or more in the UK in the previous tax year.


Residence – Summary

  • Plan to be challenged , keep evidence of arrival/departure
  • Don’t simply rely upon ‘day counting’
  • If claiming non-residence be aware of ‘everyday’ connections
  • If you are UK resident, you are subject to tax on your worldwide income and gains
  • Losing UK residence status is not as easy as you think, retaining it can be easier.
  • HMRC is interested in everybody, not just ‘high profile’


  • Care using UK as a ‘correspondence address’ OECD common reporting standards.


What is Domicile?

  • Generally ; The country that the person treats as their permanent home,  or lives in and has a substantial connection with
  • You cannot be without a domicile
  • You can only have one domicile at a time
  • You are normally regarded as domiciled in the country where you have your permanent home.
  • Your existing domicile will continue until you acquire a new one


UK Domicile

We hear ‘I don’t have a problem, I was born in the UK but I’m Non-Dom now’ so often when trying to assist UK Expats, so:

  • Born in the UK = UK domicile of origin
  • Can be lost, but difficult and open to challenge (Barlow Clowes v Henwood)
  • If you move to another country , you revert back to your domicile of origin
  • If retained on death, exposure to all UK taxes on worldwide assets


Your domicile is distinct from your nationality, citizenship and your residence status, although these can have an impact on your domicile


UK Domicile/IHT Rules


  • Nil rate band of £325,000 each
  • Transfers on death between UK Dom Exempt from IHT
  • UK Dom/Non-Dom , only up to £325,000 (after NRB)
  • Election can be made to be UK Dom following death of UK Dom spouse but…. 2 year limit and residence requirement
  • Although all assets free of IHT following election, will remain UK Dom for next 4 years, even if UK Domicile renounced and leave the UK.
  • 15/20 rule for deemed domicile


Legislation Updates – UK Domicile Rules


Retrospective from April 2017

  • If born in the UK & return to UK = immediate return to UK Dom
  • If born in the UK, retain UK Dom for 4 years after leaving
  • If acquiring UK domicile of choice, election remains for 4 years
  • ‘Lifelong’ non-domicile status to end
  • New 15/20 Deemed Dom Rule
  • UK property held through Offshore Company looked through
  • Remittance basis cannot be claimed once UK Dom
  • Asset value can be rebased to April 2017 value
  • Domicile ruling is in respect of all taxes, not just IHT.


Inheritance Tax & Domicile





  • 40% tax charge on value of estate above £325,000
  • Gifts between UK Dom spouses /civil partners exempt
  • Care required where Non-Dom spouse / civil partner


Individuals with a UK domicile of origin who planned to return to the UK as a Non-Dom must review their planning


Inheritance tax & Domicile

John has lived outside of the UK for the last 15 years working as an IT contractor and has the following assets in his estate:

Singapore Bank Account £250,000

Luxembourg Investment Platform £150,000

Apartment in Menorca £175,000

UK SIPP £100,000

UK residential property £200,000


What is his UK IHT Exposure if he returns?













Do You Have Residential Property in the UK?

  • IHT Irrespective of domicile/residence status
  • Ownership through a Company no longer provides protection
  • How will HMRC know?
  • Checks will be made when property is to be transferred as to whether property has ever been included in IHT valuation
  • Options – Insure against Liability sell or change to PPR?
  • If selling, was valuation obtained April 2015 for CGT?


UK Residential Property

  • ATED provisions in place since 2013 for HVRP that is ‘Enveloped’
  • ATED allowed charge to be paid to continue to avoid SDLT & IHT
  • IHT protection lost on all UKRP irrespective of value
  • IHT liability is the value of the ‘structure’ that relates to the UKRP
  • Debts can be offset against the value but loans between connected parties can not
  • Is there any point in paying this charge if no IHT benefits?


IHT and the Family Home

This is another we hear a lot ‘We don’t need any planning, we have a £1m IHT allowance’, wrong !


  • If you do not own a residential property, there is no £1m threshold!
  • There will be a tapered withdrawal of the additional nil-rate band for Estates (not the property)
  • With a net value of more than £2 million. This will be at a withdrawal rate of £1 for every £2 over this threshold.

More Restrictions….

  • It will not apply to reduce the tax payable on lifetime transfers that are chargeable as a result of death (UK Dom to Non Dom)
  • A property which was never a residence of the deceased, such as a buy-to-let property, will not qualify.
  • If property value is less than allowance, balance can’t be used to offset IHT on other assets

Even More Restrictions….

  • A person who dies with no direct descendants will not be able to benefit
  • Not restricted to UK properties only however, the property must be within the scope of UK IHT and included in the deceased’s estate.
  • Cannot be claimed by Non-UK Doms unless the home is in the UK


Non-Dom Planning

  • Jane is John’s wife, she also works in IT and will be moving back to the UK with him. She was not born in the UK however, it’s highly likely they she will be deemed domicile in the future. She is concerned that the wealth that has been accumulated is going to be eroded by the UK tax system. She requires access to her capital and isn’t keen on paying the remittance basis charge.

She has the following assets:

  • Non UK Bank accounts                                  £450,000
  • Non UK Stock Portfolio                                 £275,000
  • Non UK Investment Platform                      £300,000


UK Tax Exposure?


What is the remittance basis tax charge?

Annual tax charge to prevent non-UK source income and gains from being taxed. Only applies to Non-Doms.

    First 7 years                        £0

7 / 9 Years                           £30,000

12 / 14 Years                       £60,000

17 / 20 Years                       £90,000


Under new legislation more than 15 Years all assets will taxable as deemed UK domicile


Non-Dom – Moving to the UK

This is what you will have to pay:








By Using Isle Of Man Insurance Product and Trusts










Excluded Property Trust

Planning Objective

  • IHT mitigation , access to trust fund
  • Generally used by those who:
  • Are currently non-UK domiciled but who may become UK domiciled in the future
  • Want to ensure that post April 2017 rules do not impact planning
  • How does it work?
  • Assignment of Non-UK situs property (IOM Insurance Product) to trust
  • Person who creates trusts has unrestricted access
  • As trust fund created prior to UK Dom, not taken into account for IHT


IHT Planning – Excluded Property Trusts














UK Tax Treatment on Creation

  • N/A , on creation as Settlor is not UK domiciled therefore, property is ‘excluded’ from IHT
  • Where Insurance product used, CGT protection and IT deferral


  • Must be certain of domicile status
  • Must only contain non-UK situs assets


UK -Dom Planning Post April 2017

What can John do?

  • He returns to his UK domicile of origin as soon as the residency test met
  • Cannot claim the remittance basis of taxation
  • His corporate structures holding properties are looked through for IHT
  • All non UK source income & gains are taxable in the UK
  • Worldwide estate is subject to IHT


Popular Planning using Tax Efficient Investment

Accepted non-offensive IHT Planning?

  • Mostly Trust based Insurance Co’s investment products that facilitate

– IHT mitigation through Outright Gifts

– IHT effective Loans/Asset Freezing

– Immediately Discounted Gifts


Importantly, these structures ARE recognised by HMRC as legitimate tax planning and are not caught by any Anti-Avoidance legislation


We cannot stress enough that the correct Estate Planning, Tax Planning, Succession Planning, call it what you will is vitally important and does not have to cost as much as you think, we can look at your current situation and gauge the best way forward, don’t leave it and think it’s OK. Also using UK based advisers or lawyers can also not work too well, give us 15-20 minutes of your time and let us plan your future correctly with no obligation.


Have a good day

All the best



Farringdon Group

+60 3 2026 0286



Week 46 In Review – US Tax Bill Clears First Legislative Hurdle










  • GOP tax bills passed by House, Senate committee
  • Japan economy expands for 7th quarter
  • Eurozone reports solid growth, inflation pace slows
  • ECB warns economy still reliant on stimulus


Global equities edged slightly lower this week amid an uptick in volatility. Yields on benchmark US 10-year Treasury notes slipped 3 basis points, to 2.35%, while the price of a barrel of West Texas Intermediate crude oil fell about $1 to $56.10. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), rose to 11.60 from 11.10 a week ago, but traded as high as 14.5 at midweek.




US House passes tax cut; Senate bill passes committee

The US House of Representatives passed its version of the Republican tax bill by a vote of 227–205, with 13 Northeast Republicans, angered by the loss of tax deductibility of state and local taxes, voting no, along with all the Democrats The Senate Finance Committee passed its version of the bill late Thursday, with the full Senate expected to vote after the Thanksgiving holiday.

If the Senate passes its version, the differences in the two bills could be ironed out in a conference committee before a final vote. GOP leaders hope to complete the process by Christmas, though it could linger into early 2018 if the two versions of the bill cannot be reconciled quickly.


Japan growth streak continues

Japan reported its seventh consecutive quarter of growth in the third quarter, the longest streak in more than 15 years. The economy expanded at a 1.4% annual pace last quarter, down from a growth rate of 2.6% in the April–June period. Rising exports were the main contributor to growth, the government reported.


Eurozone maintains solid growth

Europe is experiencing the fastest growth rate in a decade, rising 2.5% year over year, which is a faster pace than the 2.3% US rate. The United States, however, experienced stronger growth in Q3 than the Eurozone. While growth is solid around the world, inflation remains below central bank targets.

Eurozone core inflation rose a scant 1.4% in October, well below the European Central Bank’s target of near 2%. Growth in the United Kingdom was more subdued than on the continent, coming in at 1.5% annually.


ECB’s Draghi: Robust recovery reliant on stimulus

Europe’s economic recovery is robust and the fall in unemployment has been remarkable, European Central Bank president Mario Draghi said on Friday, but inflation is not at a point where it can be self-sustaining without stimulus.


Venezuelan bondholders in limbo

Venezuela and state-owned oil company Petróleos de Venezuela (PDVSA) were declared to be in selective default by the three major credit rating agencies this week. Meanwhile, Russia agreed to restructure nearly $3.2 billion in Venezuelan debt, while China said it has confidence that Venezuela will be able to properly handle its debt issues. In an effort to assuage bondholders’ concerns, PDVSA reportedly this week made an $80 million interest payment that was due on 12 October.


May’s continued leadership in focus

UK prime minister Theresa May’s continued leadership of the Conservative Party was called into question last weekend as the Sunday Times reported that 40 members of her party have agreed to sign a letter of no confidence. Forty-eight signatures are needed to spark a leadership vote.

May’s grip on power remains tenuous, but with no obvious replacement waiting in the wings she may be able to hang on to her post as the Brexit process unfolds.




Earnings growth faster for multinationals

According to FactSet Research, companies who make more than 50% of their sales outside the US showed much faster earnings growth in the third quarter than companies whose overseas sales come in at less than 50%. For the S&P 500 Index as a whole, earnings growth is running around 6.1%. For companies with the majority of their sales outside the US, that figure jumps to 13.4%.

Companies whose sales are mainly inside the US saw their earnings grow just 2.3%. The revenue story is similar. Those with greater sales outside the US saw Q3 revenues jump 10% year over year, while those with mostly US sales rose 4.2%. The technology and energy sectors, with their heavy global exposure, were responsible for much of the out-performance, FactSet said.


The Week Ahead






All the best and have a great week



Farringdon Group

+60 3 2026 0286

Week 45 In Review – Tax Plans In Flux










  • Congress reworking tax proposals
  • Trump inks China trade deals
  • Saudi corruption probe, regional tensions boost oil
  • NY Fed chief announces retirement
  • China central bank head voices qualms over high leverage


Global equities reached all-time highs at midweek before backing off slightly ahead of the weekend. Yields on US 10-year Treasury notes rose modestly, trading at 2.38% Friday morning versus 2.34% a week ago. Oil gained ground amid uncertainty surrounding Saudi Arabia and Venezuela, climbing to $57.20 per barrel from $54.60 last week. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), rose to 11.11 from 9.5 last week.



US House and Senate offer differing tax plans
The US House Ways and Means Committee, the tax-writing arm of the lower house, amended the tax reform proposal it put forth last week. The Senate Finance Committee unveiled its plan for the first time on Thursday. Among the key differences the two bodies will need to iron out is the effective date of the proposed corporate tax cut from 35% to 20%. In the House bill, the cut would go into effect next year, while the Senate’s plan calls for the cut to become effective in 2019. GOP leaders are under intense pressure to pass a tax bill before the end of the year after failing to enact any major initiatives during the Trump administration’s first year in office.


Trade deals unveiled during Trump China visit
According to the White House, $250 billion in trade deals were agreed during US president Donald Trump’s visit to Beijing. Skeptics noted many of the announced deals were not contractual obligations and some may have been agreed previously. Despite the skepticism, some Chinese trade barriers appear to have been lowered, notably on the importation of US beef, which was halted in 2003 as a result of a BSE (mad-cow disease) scare in 2003.


Oil prices rise to two-and-a-half-year highs
Saudi Arabia’s crackdown on corruption, growing tensions between Iran and Saudi Arabia and the potential for a Venezuelan debt default all helped push oil prices higher this week. While short-term factors could push prices up in the near term, spare US production capacity could come back on line quite quickly, analysts say, limiting the market’s upside over the medium term.


NY Fed seeks new leader amid central bank turnover
The US Federal Reserve will have all-new leadership before long as Janet Yellen’s term as chair expires in February. Vice Chair Stanley Fischer resigned last month, and now New York Fed president William Dudley has announced that he too will step down in 2018. So far, markets seem unconcerned by the turnover at the top of the central bank now that President Trump has nominated Fed governor Jerome Powell to succeed Yellen as chair. This week, newly appointed vice-chair for bank supervision Randal Quarles spoke publicly for the first time, indicating that he believes the Fed should take a fresh look at post–financial crisis banking regulations.


China’s PBOC warns of high leverage
People’s Bank of China governor Zhou Xiaochuan warned again this week that his country’s financial system is becoming significantly more vulnerable because of high leverage. Risks are accumulating, the central banker bluntly warned, that are “hidden, complex, sudden, contagious and hazardous.” Zhou said China should open up markets, relax capital controls and reduce restrictions on non-Chinese financial institutions to counter the rise in leverage.


UK’s May weakened further by Westminster scandals
Already politically vulnerable owing to the Conservative Party’s poor showing in snap elections earlier this year and a lack of progress toward a controlled Brexit, British prime minister Theresa May found herself further weakened this week by a growing sexual harassment scandal that forced her defense minister Michael Fallon from office. Secretary of State for International Development Priti Patel was also forced to resign, for having undisclosed meetings with Israeli officials. With just weeks to go for the United Kingdom to come to a financial settlement with the European Union over Brexit, the sackings are seen as a major distraction.


Investor sentiment remains elevated
Bullish sentiment has been running strong of late, and by one measure it is at its most elevated level in three decades. According to Investors Intelligence, 64% of newsletter writers were bullish this week, versus just 14% who were bearish. The spread between bulls and bears has been at an elevated level for six straight weeks. Another sign of market confidence is a record level of margin debt, according to the Wall Street Journal. Margin loans grew 14% from the end of 2016 through the end of Q3, the Journal noted.




With 90% of the members of the S&P 500 Index having reported for the third quarter, blended earnings grew 6% versus the same quarter a year ago. Stripping out insurance companies, which were hit by hurricane claims, earnings rose 8.3%. Revenues rose 5.8% year over year.







All the best and have a great week



Farringdon Group

+60 3 2026 0286