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  1. Wealth
  2. Tax
March 31, 2016

How Game of Thrones might game tax

By Spear's

How might our fictional friends be preparing for the tax year end, assuming the Seven Kingdoms of Westeros have the same rules as those in the UK? Corinne Staves has the answers.

Fans of the highly acclaimed series and/or HMRC be warned, this blog contains spoilers.

‘Death is so terribly final, while life is full of possibilities.’

Death is one of life’s certainties and this rings even truer for residents of Westeros. Inheritance tax must therefore be constantly at the forefront of people’s minds.

We have never really had a sense that Cersei Lannister has a philanthropic outlook, and having had a tough time in prison at the hands of fictional religious zealots, presumably she will be even less inclined to use the exemption to make inheritance tax free gifts to charities (particularly religious ones).

However, a flurry of marriages has meant that she has been able to make inheritance tax free gifts of £5,000 to each of her children to celebrate. The fact that the bride was the same for both sons’ marriages is immaterial. Of course, the gift must be made on or before the marriage and is conditional on the marriage. So, the gift to Joffrey was effective as his swift demise at the wedding breakfast is, for these purposes, irrelevant.

However, the poisoning of Myrcella before she tied the knot with the dishy Prince of Dorne sadly meant Cersei’s only daughter, and the potential inheritance tax benefits, were lost.

Elsewhere in Kings Landing, Petyr ‘Littlefinger’ Baelish still seems to be enjoying ample income each year.  With his dastardly outlook and questionable choice of friends, surely he cannot make it to season seven. Presumably therefore he has established a pattern of annual gifts (of any amount) from his excess income. He will be maintaining this in order to take advantage of the relief which allows inheritance tax free gifts, of any amount, to individuals or into a trust where the gift is part of a pattern of regular giving.

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The recent attacks on his commercial empire may have had a detrimental impact on this tax year’s income. If he does not have excess income this year then to preserve the inheritance tax benefits, it would be important that his records show the reduced income contributed to his decision not to make annual gifts this year. But they must also show that he wishes to continue with the pattern of giving in future tax years.

Let us hope that Jon Snow did know something, and made full use of the inheritance tax annual exemptions of £3,000 each tax year (or £6,000 in a tax year if the previous year’s allowance was not used) before he popped out for that fateful chat with his colleagues.

‘Winter is coming’

Foolishly, the Wildlings crossed the border just before the start of a new tax year. Had they waited until after 5 April then the eventual date on which they became deemed domiciled would be a year later. Having said that, given the prevalence of White Walkers in their former homes, many may have already decided to remain permanently South of the border and have therefore already acquired a domicile of choice.

Across the Narrow Sea, however, Daenerys Targaryen has sensibly decided to wait until the new tax year before invading to seize the Iron Throne and thus risk becoming tax resident. Indeed, she seems to be taking a very prudent approach, remaining offshore until there is absolute certainty about the rules for non domiciled individuals following the June referendum and its impact on immigration. Her investment decisions have also been strong, with former slaves and dragons proving to be sound investments for her.

Her prudence is unsurprising; she is advised by similarly cautious characters.  Presumably the newly appointed Tyrion Lannister found favour quickly when he told her that he had already used his full 15/16 ISA allowance and had considered disposing of assets that have increased in value over time before 6 April, to maximise the use of his capital gains tax annual exemption.

Residents of the Seven Kingdoms should also take note that there are pension planning opportunities in each tax year, but let’s be frank, nobody makes it to pension age.

Corinne Staves is a Game of Thrones boxset owner, and partner of Maurice Turnor Gardner LLP.

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