A client has proposed transferring property to a family member (other than a spouse) before 5 April. A perhaps unintended consequence is that he would 'bank' any lettings' relief before it is abolished. Any views on what this could fall foul of would be welcomed
Replies (7)
Please login or register to join the discussion.
From a tax point of view, assume client is aware that this would trigger a capital gains tax charge (assuming it is not his main residence) and potential stamp duty charge if there is any actual consideration or a mortgage outstanding on the property?
From a non-tax point, what is the reason for the transfer?
The base cost of the property in his brother's hands would be market value at date of transfer, and the overall gain (including that on subsequent disposal) would be be exposed to less CGT.
You appear to be conflating what will be two separate transactions, the first being the making of the gift, which will crystalise a CGT liability at market value, using normal reliefs available (including lettings relief).
The second transaction will be the eventual disposal by the brother, which will be subject to whatever taxes etc. apply when that happens.
The two are completely separate, independent transactions.
Client has decided to do something unremarkable - gift an asset to a family member. You have pointed out a statutory relief that might apply as a consequence. If that is promotion of tax avoidance then we’re all stuffed.
Consider IHT re the gift in the event of his estate falling into charge within seven years
What's the problem? The relief is there, he is not falsifying anything, just take it and be glad he's used it before it's been removed.