Pre owned assets

Pre owned assets

Didn't find your answer?

I have a client part of whose business is buying and selling xmas trees.He is 72 and is thinking of buying a small plot of land to grow trees on. These will not be mature for 12 years.
He asked whether this plot of land should be bought in his own or childrens' name.
From IHT point if he provides funds for the purchase in childrens' name and survives for 7 years this will save IHT. (Would land used for this purpose receive business assets relief 100%?).But would such a transaction be caught by the POA rules?
Any other thoughts?
knuckles

Replies (1)

Please login or register to join the discussion.

avatar
By User deleted
23rd Aug 2006 10:09

What saving?
Because of the 'contibution' rule, such a scheme would appear to be prima facie caught by the POA regime. However,I would be astounded if someone were to tell me that a small plot used for the growing of Xmas trees would command a rent in excess of £5000 - so we are looking at a de minimis exclusion.
This, for me, is a side issue to the IHT aspect. If the client is going to continue until he departs this world then his activity should attract 100% BPR on death (some may feel that APR is appropriate but the same result ensues). In this particular circumstance, why an immediate cash gift that could augment the Estate without any relief ( I wish the gentleman long life and certainly more than 7 years) ? Alternatively, projected retirement and sale of the business in ,say, two or three years time could have an impact on thinking. IHT reliefs at death would of course be out the window but there would be some potential mitigation. CGT now comes into the equation and , with the necessary period of ownership under their belts, the donees could claim BATR. The latter coupled with multiple annual exemptions leads to more saving. Perhaps Knuckles would tell us if there is another sub-text here?

Thanks (0)