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Gifting artwork

Gifting artwork

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My client is 70 years of age, widowed, and is trying to divest herself of as much capital as possible to negate/avoid the inevitable IHT charge on her estate. She wishes to gift a ceramic vase which has been valued at £165,000 to her son. As she purchased this many years ago for just £11,000 there will, on the face of it, be a considerable liability to CGT.

She is actually "happy" to pay the CGT. I have suggested, however, that by setting up a trust to acquire the vase and thus triggering an immediate charge to IHT the gain could be held over and then at some point in the future the vase could be transferred out of trust to her son with the gain being held over again. She is particularly anxious that he own the vase unencumbered and thus would wish to transfer it out of trust to him as soon as possible.

Does anyone have any thoughts on this and how it might be viewed by HMRC?  

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By paul.benny
09th Nov 2021 15:51

What’s the basis of the valuation? If that’s replacement cost/insurance value, it may well be overstating the realisible value by a factor of 2-3x. It may be worth putting more effort into getting a ‘better’ valuation.

Is it even art or is it a chattel?

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Replying to paul.benny:
paddle steamer
By DJKL
09th Nov 2021 16:06

But what is Art? Can I describe how my daughter leaves her bedroom when she returns south as Art?

https://www.goodreads.com/book/show/909511.The_Principles_of_Art

A book I struggled through at university emerging none the wiser.

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By tom123
09th Nov 2021 16:37

I would be too scared to breathe near such a thing..

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Replying to tom123:
paddle steamer
By DJKL
09th Nov 2021 16:49

Like my two Hock glasses, they are probably about 100 years old, likely not worth that much, have very long delicate stems and I have never , ever dared drink from them. (Inherited via my mum's family)

The catch with having family stuff is not the price but the history.

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By Justin Bryant
09th Nov 2021 17:09

This is fairly standard CGT rollover relief planning.

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By The Dullard
09th Nov 2021 20:47

Perfectly legitimate planning. It needs to be in the trust for at least one calendar quarter; otherwise there isn't the requisite (0%) exit charge to make s 260 applicable on appointment. One question about the son though; how much does he urn?

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Replying to The Dullard:
Scooby
By gainsborough
10th Nov 2021 09:15

The Dullard wrote:

Perfectly legitimate planning. It needs to be in the trust for at least one calendar quarter; otherwise there isn't the requisite (0%) exit charge to make s 260 applicable on appointment. One question about the son though; how much does he urn?

*Chuckle*

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