Gift your home to your daughter and her husband. Husband goes off with a new woman. House has to be sold to give him half its value. Happened to my friend.
You cant gift the asset and then remain in the property. I know friends family that did that. The parent lived 15 years after the gift. Hmrc found out the parent remained in the property after the gift and therefore ignored the gift.
May I ask what your professional qualification is? You may know someone who has done this but did not follow the correct rules of paying market rent to the children. This would’ve been called a gift with reservation.
HMRC will 'see through' a Gift With Reservation, eg gifting your home into trust yet still living there. Ditto the Local Authority for assessment purposes for care costs.
I think it really depends on whether you want to go into local authority care or if you have other provisions in place. There is not just one solution. If you pay market rent then this would not fail. www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332
Avoid 40% UK inheritance Tax (IHT)? Use gifts and trusts Read about our IHT services www.optimiseaccountants.co.uk/services/inheritance-tax-advisors/ Need a buy to let mortgage? survey.zohopublic.com/zs/GuCCYx
Thanks for a great video, In your last example you stayed under the IHT lifetime allowance, if you were to use the same example you have but say there was no mortgage so now you have £175,000 above the IHT LTA in your example. I take it the £175,000 is subject to IHT or the 7 year rule with with help from your advisors? Or is there a way still to keep that £175,000 from being subject to CGT and IHT? Thanks
There are certainly options and happy to discuss those on a call with you Go to option 2 to book a call with me: optimiseaccountantsltd.as.me/optimiseaccountantstaxconsultation
Hi Really good video thank you. Could you clarify something for me please. You said in your video at time 3.27 that there is £1,000,000 IHT lifetime allowance + RNRB. I thought the £1,000,000 includes the £175k x 2 = £350k RNRB so you don't get it on top of the £1m - is that correct? My second question is on the £1m allowance ( including RNRB) can this allowance be used to include a buy to let property jointly owned by a couple in addition to their main home ? Thank you.
Each person might benefit from £325,000 inheritance tax allowance in the lifetime. They may also be illegible for the £175,000 nil rate band on there a red residential property. Add those together and you get £500,000. This is doubled up as a couple to £1 million. I hope this clarifies
Thanks for the clarification. At 11.50 you were explaining about moving a buy to let into a trust and offsetting the value with IHT lifetime allowance. Can a trust be a company ? Thank you.
Hi Mark, I listened back but could not hear me saying taper relief at the six-minute mark other than the IHT charge on gifts. Would you clarify for me? Thanks in advance. 🙏 You're correct. The tapering of the inheritance tax threshold applies only once the full £325,000 nil-rate band (NRB) has been used.I neither assumed that they had or had not used their IHT lifetime allowance as it is a general video. It would be wrong if I assumed that they had now used their IHT lifetime allowance and correct if I had assumed they have used their IHT lifetime allowance. I did not state the gift was £100,000 in this example (but made no reference to what gifts were made previously), which may have been below or above the £325,000.To ignore the taper allowance would be more "wrong" than it was to include it in the narrative allowing people to be more armed when they have a more thorough tax consultation with someone like you as an FCA or anyone else rather than use a video to do their entire tax planning. Is that fair to say? Finally, I think it is fair to say that this video is out dated and is going to be updated with a new video imminently, given all the changes that the Labour Party have made by including pensions, businesses and agriculture. Do you agree with these changes in Mark?
One thing to say is that the video is generic in nature, and I would not like to assume they have or have not used the £325,000 at the point of the gift. I would rather state the rates per HMRC. I would expect viewers to take advice to discuss their specific situation, as I raised at the 5 and 12 minute mark:
What about this theoretical situation; Parents own 3 houses all owned outright 1 primary residence and 2 that are rented out, the 2 rented houses were purchased at a very low price and subsequently would be valued at nearly triple the original purchase price. How would these properties be passed to two children/adults. Would a business be better? Or trust thanks
Give the values you will appreciate that tax planning with your fathers accountant would’ve a good investment to make to get the most suitable tax plan 👍
@@UK-Property-Tax-Accountants yes however my parents have never had an accountant always been well informed I am 21 and staring a 3 year training course for my ACA qualification, so what would be the next step, you believe simply speak to a tax accountant
Yes you can do this. There will not be any capital gains tax if it is a home. However, given it is a buy to let property, capital gains tax will apply. No tax will be charged, unless there is any type of consideration (moneys worth transfer).
Thats great new, although my solicitor said that as my brother and I are powers of attorney and my brother wants to transfer the the buy to let house, over to him, it could be done but it wasn't straight forward, it would be time consuming and expensive. also to note my dad has early dementia but my um is of sound mind. thank you @@UK-Property-Tax-Accountants
You already get IHT tax relief on your personal primary residence and estate for a couple up to £1m excluding pensions so the only people this would affect are ones who could afford personal advice anyway
I have lived in a house for 35years. No rental. Owner has dissappeared abroad. Claiming it as mine is not a problem, but would i have to pay tax on it?
Is it true that if someone has a house worth 327 thousand pounds and leaves it to their child in their will, will the child pay inheretence tax? or does the 500k threshold for leaving to childeren take effect and mean no inheritance tax is owed? sorry I'm new to this
Great questions There is a 325 IHT lifetime allowance and a 175 residential nil rate band these rates doubled for married couples The 175 is reduced by £1 for every £2 over a net asset value of £2m. This is quite complex and professional advice is worth seeking
@@UK-Property-Tax-Accountants thank you for responding, Ill have to ask profesionally as I still dont quite understand, again thank you for resonding though
Please can you give example in future video- if we have money in stock & shares ISA. How does IHT apply on it -esp if no other property owned. Is it also covered by Lifetime IHT allowance od £325 K?
That is correct. However, you might benefit from the £175,000 Residential Nil Rate Band (RNRB) if the hime value exceeds £325,000 up to £500,000. Get some tax advice from your accountant on this point
@@UK-Property-Tax-Accountants 1. the surviving spouse is in the UK and intends to stay in the UK, then inheriting the 1 000 000 mansion will not attract any inheritance tax? No? 2. The property will only attract a capital gains tax whenever it is sold? 3. Prior to selling it if the property is co-owned by 3 people will the CGT be minimised to the tax allowances of all 3 people?
Thank you for the additional questions. Given the complexity I would much rather you speak with your tax advisor. You are in danger of getting bits of information and trying to pull them together to form a strategy. This often leads to mistakes being made please book a good hour with your tax advisor to explore all of the scenarios that you are talking about
Just be careful about gifting your property to your children if you are still living together. HMRC could ask why you are not paying rent to your children
I think it is fair to say that’s not everyone has the expertise that you clearly do have. These videos are introductory faced rather than expert level. Consulting your Tax practitioner would be the very next step for you.
Request a call back: If you are looking for a new US or UK real estate property tax specialists contact us here: survey.zohopublic.com/zs/80zrXp
Gift your home to your daughter and her husband. Husband goes off with a new woman. House has to be sold to give him half its value. Happened to my friend.
This could have been avoided by using a rather simple trust
The last example of using the Trust to mitigate CGT & IHT - does it apply to a But To Let property too?
It can if you structure the trust correctly
This is such a useful video, thank you so much for your professionalism Sir!
I am delighted it helped
Could you please point me to resources including books regarding living trusts? Thanks
Sadly I do not know any good ones. Sorry 😞
@doriangray6985 yes, but many people do not make gifts just for that reason to be fair
You cant gift the asset and then remain in the property. I know friends family that did that. The parent lived 15 years after the gift. Hmrc found out the parent remained in the property after the gift and therefore ignored the gift.
May I ask what your professional qualification is?
You may know someone who has done this but did not follow the correct rules of paying market rent to the children. This would’ve been called a gift with reservation.
HMRC will 'see through' a Gift With Reservation, eg gifting your home into trust yet still living there. Ditto the Local Authority for assessment purposes for care costs.
I think it really depends on whether you want to go into local authority care or if you have other provisions in place. There is not just one solution. If you pay market rent then this would not fail. www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332
Avoid 40% UK inheritance Tax (IHT)? Use gifts and trusts Read about our IHT services www.optimiseaccountants.co.uk/services/inheritance-tax-advisors/ Need a buy to let mortgage? survey.zohopublic.com/zs/GuCCYx
Thanks for a great video, In your last example you stayed under the IHT lifetime allowance, if you were to use the same example you have but say there was no mortgage so now you have £175,000 above the IHT LTA in your example. I take it the £175,000 is subject to IHT or the 7 year rule with with help from your advisors? Or is there a way still to keep that £175,000 from being subject to CGT and IHT? Thanks
There are certainly options and happy to discuss those on a call with you
Go to option 2 to book a call with me: optimiseaccountantsltd.as.me/optimiseaccountantstaxconsultation
Hi Really good video thank you. Could you clarify something for me please. You said in your video at time 3.27 that there is £1,000,000 IHT lifetime allowance + RNRB. I thought the £1,000,000 includes the £175k x 2 = £350k RNRB so you don't get it on top of the £1m - is that correct? My second question is on the £1m allowance ( including RNRB) can this allowance be used to include a buy to let property jointly owned by a couple in addition to their main home ? Thank you.
Each person might benefit from £325,000 inheritance tax allowance in the lifetime. They may also be illegible for the £175,000 nil rate band on there a red residential property. Add those together and you get £500,000. This is doubled up as a couple to £1 million. I hope this clarifies
Thanks for the clarification. At 11.50 you were explaining about moving a buy to let into a trust and offsetting the value with IHT lifetime allowance. Can a trust be a company ? Thank you.
A trust and a limited company or two separate things and not interchangeable
The tapering mentioned around the 6 minute mark is wrong. That only applies AFTER you have already utilised the full £325k NRB
Hi Mark, I listened back but could not hear me saying taper relief at the six-minute mark other than the IHT charge on gifts. Would you clarify for me? Thanks in advance. 🙏
You're correct. The tapering of the inheritance tax threshold applies only once the full £325,000 nil-rate band (NRB) has been used.I neither assumed that they had or had not used their IHT lifetime allowance as it is a general video. It would be wrong if I assumed that they had now used their IHT lifetime allowance and correct if I had assumed they have used their IHT lifetime allowance.
I did not state the gift was £100,000 in this example (but made no reference to what gifts were made previously), which may have been below or above the £325,000.To ignore the taper allowance would be more "wrong" than it was to include it in the narrative allowing people to be more armed when they have a more thorough tax consultation with someone like you as an FCA or anyone else rather than use a video to do their entire tax planning.
Is that fair to say?
Finally, I think it is fair to say that this video is out dated and is going to be updated with a new video imminently, given all the changes that the Labour Party have made by including pensions, businesses and agriculture.
Do you agree with these changes in Mark?
One thing to say is that the video is generic in nature, and I would not like to assume they have or have not used the £325,000 at the point of the gift. I would rather state the rates per HMRC. I would expect viewers to take advice to discuss their specific situation, as I raised at the 5 and 12 minute mark:
What about this theoretical situation; Parents own 3 houses all owned outright 1 primary residence and 2 that are rented out, the 2 rented houses were purchased at a very low price and subsequently would be valued at nearly triple the original purchase price. How would these properties be passed to two children/adults. Would a business be better? Or trust thanks
Give the values you will appreciate that tax planning with your fathers accountant would’ve a good investment to make to get the most suitable tax plan 👍
@@UK-Property-Tax-Accountants yes however my parents have never had an accountant always been well informed I am 21 and staring a 3 year training course for my ACA qualification, so what would be the next step, you believe simply speak to a tax accountant
For peace of mind and to ensure that things are done correctly, a tax professional would be the safest next step 🙏
Can you transfer a Buy to let with no mortage outstanding to your child if they are currently power of attourney
Yes you can do this. There will not be any capital gains tax if it is a home. However, given it is a buy to let property, capital gains tax will apply. No tax will be charged, unless there is any type of consideration (moneys worth transfer).
Thats great new, although my solicitor said that as my brother and I are powers of attorney and my brother wants to transfer the the buy to let house, over to him, it could be done but it wasn't straight forward, it would be time consuming and expensive. also to note my dad has early dementia but my um is of sound mind. thank you
@@UK-Property-Tax-Accountants
The statement above is wrong. Where the parties are connected Market Value is substituted where a gift or transfer at under value is made.
It is great that you got the result you wanted and deserved. An I’m possession trust can certainly be used in special circumstances such as yours too.
IHT needs revaluing it’s so disproportionate to hse prices. Not revalued for 18yrs.?..?
100% agreed with you 🙏
You already get IHT tax relief on your personal primary residence and estate for a couple up to £1m excluding pensions so the only people this would affect are ones who could afford personal advice anyway
Indeed and these videos are there for awareness purposes as not everyone is going to know this
Great video
Thank you and a very kind of you
What if you don't have it in writing? My partners late mum gifted him the house and lived in it for years before she died. Well over 7yrs.
Without proof It would be as though it never happened
@Property & Expat Tax Tips What a right pain. He literally has proof of paying the council tax all these years 🤦🏼♀️
Stupid question
8.17 overlooks SDLT on mortgaged property.
@Seadog63 I talk about that in my subsequent videos coming up 👍
Thank goodness for a safety deposit box.
Must be a big one though 😂
Thanks all
You are welcome 🙏
A very informative video 📹 👏🏿 👍🏿
Thank you and I am pleased it was helpful
is buy to let different to second home ?
They are identical when it comes to tax purposes
I have lived in a house for 35years. No rental. Owner has dissappeared abroad. Claiming it as mine is not a problem, but would i have to pay tax on it?
That is a good question. One that cannot be answered your TH-cam channel.
Have you checked with Land Registry? This will record ownership.
Many thanks for the reply. Yes it has another persons name. No address@@tonykelpie
Is it true that if someone has a house worth 327 thousand pounds and leaves it to their child in their will, will the child pay inheretence tax? or does the 500k threshold for leaving to childeren take effect and mean no inheritance tax is owed? sorry I'm new to this
Great questions
There is a 325 IHT lifetime allowance and a 175 residential nil rate band these rates doubled for married couples
The 175 is reduced by £1 for every £2 over a net asset value of £2m.
This is quite complex and professional advice is worth seeking
@@UK-Property-Tax-Accountants thank you for responding, Ill have to ask profesionally as I still dont quite understand, again thank you for resonding though
Please can you give example in future video- if we have money in stock & shares ISA. How does IHT apply on it -esp if no other property owned. Is it also covered by Lifetime IHT allowance od £325 K?
Stocks and shares are taxed at their market value in the same way as property so it follows the same calculation.
I hope that helps 👍
How much does it cost to get advice and set something like this up?
Please see link to see our services survey.zohopublic.com/zs/80zrXp
If you use the 325k IHT allowance for buy to let property, then you no longer have this allowance for family home. Is my understanding correct?
That is correct. However, you might benefit from the £175,000 Residential Nil Rate Band (RNRB) if the hime value exceeds £325,000 up to £500,000.
Get some tax advice from your accountant on this point
@@UK-Property-Tax-Accountants if a home is valued at 1 000 000 owned jointly by a couple then the surviving will pay 0 IHT is this correct?
If the remains spouse is in the UK then yes
@@UK-Property-Tax-Accountants 1. the surviving spouse is in the UK and intends to stay in the UK, then inheriting the 1 000 000 mansion will not attract any inheritance tax? No?
2. The property will only attract a capital gains tax whenever it is sold?
3. Prior to selling it if the property is co-owned by 3 people will the CGT be minimised to the tax allowances of all 3 people?
Thank you for the additional questions.
Given the complexity I would much rather you speak with your tax advisor.
You are in danger of getting bits of information and trying to pull them together to form a strategy.
This often leads to mistakes being made please book a good hour with your tax advisor to explore all of the scenarios that you are talking about
There are dangers to this approach but if your family is strong then do it.
Indeed the risks are very real too
Just be careful about gifting your property to your children if you are still living together. HMRC could ask why you are not paying rent to your children
There are certainly many risks, which I have gone through on my latest video
Sell and emigrate.
It is what I did
Sir what you are telling we already know this .Something new please ,
,
I think it is fair to say that’s not everyone has the expertise that you clearly do have. These videos are introductory faced rather than expert level. Consulting your Tax practitioner would be the very next step for you.
🤩