I own a small commercial property which I am about to gift to my wife in order to shelter the income from my 40% tax band. My solicitor has suggested that I retain a 1% share and gift 99% to my wife. He's a bit vague about the detailed reasons for this, just that it's his standard advice. I will be asking him to spell this out but I wondered what the views of the AWeb community were on the pros and cons of this.
Cheers, Neil
Neil Eglintine
Replies (7)
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The only time when an SDLT issue can arise is if there is a mort
The Stamp Office are of the view that assumption by the donee of the mortgage liabilty is part payment, and so stampable.
Ah, thank you
Yes. I understand the second CGT allowance and the control over disposal issues. I hadn't considered the settlement trap.
As far as SDLT is concerned, I had assumed that the gift of 99% would be exempt, as would the outright gift. Have I misunderstood?
Or indeed, perhaps
Ignoring the tax side of things, I would guess it means that your wife would be unable to easily sell the property without your permission/cooperation , so in the unfortunate instance that you were to have a falling out, she couldn't sell the building from under you, which she could if she held 100% of it.
What your solicitor may have in his mind is that you may want to
If the property is jointly held, then you can chose to rely on a default 50;50 allocation of income under ICTA s282A, or insist on a prorata allocation under ICT s282B.
There can be problems if the Revenue argue that s282A is disapplied under 282A(5) by virtue of the notorious 'settlement' provisions of ITTOIA s625 .
Having regard to these draconian provisions I would go for an outright gift to your spouse, which will be free from SDLT as well.
I assume that your wife is not non domiciled in the UK in circumstances where you are UK domiciled, as the gift would then be subject to IHT, albeit as a Potentially exempt transfer.
Perhaps it's because..
if the property is sold/transferred at sometime then you can utilize your CGT annual allowance.
in summary it appears
SDLT only if mortgage
IHT age important PET
CGT as discussed
IT definitely a settlement issue, await HOL Artic decision July
why not sell it to her on very easy terms (check SDLT)