A review of the thread makes it clear that the querist is concerned about care home fees and IHT is not an issue.
Do we have any readers who have dealt with this situation in practice?
and am I right in thinking the present situation arose because a government in the 90's was concerned about the number of ancients blocking the free NHS beds in hospitals, thus giving rise to a lucrative industry?
I think somewhere the querist said IHT wasn't an issue, presumably because of IHT thresholds.
Why is the care home worry not averted? If the client went into care fairly soon on, then of course she has deprived herself of the asset. But if she was in good physical and mental health when she made the gift, is there a period beyond which it is not included in the donor's estate?
Settlor retains an interest, consequently she is taxed on the rent.
Suppose the settlor has at some time lived in the property and it has been her PPR. This will minimise her cgt. and suppose, for whatever reason, she should at some future date , decide to return to the property? What would be the effect on her income tax then, or on her care home position?
Long time since I retired, but are there not inheritance tax consequences of reservation of benefit?
And if the donor is elderly, and needs to go into care, is she still treated as still owning the property when assessing her contribution for her care costs to the local authority on the grounds she is deliberately dissipating her estate?
It is normally preferrable to issue a licence to occupy rooms rather the more formal letting agreeement. The rooms revert to the user if the business ceases.
The owner can use the rooms at night and so PPR is retained. A proportion of interest is deductible if the house is mortgaged. All the costs, including council tax, are proportioned and deducted.
Of course, Mr Marks would be taxable on the rent, but expenses can be decucted, the rent is a charge against CT, and there is no NI on it, nice a nice way of extracting funds.
but it's 4 years since I retired, and this infomatio might be superseded.
I've retired now, but as I had a niche market of computer-literate clients I was advised that they could be hundreds of miles away and still serve them. Initial interviews could be a problem, but at that niche market's annual conference was a good opportunity, or a trip by train (not so much dead time, time to catch up on professional reading).
A colleague in this small town simply refused to see anyone without an appointment. This worked for him. His office was upstairs and no one could get past his receptionist!
Working from home is fine if you haven't got children. And if you've got teenagers, forget it!
When I downsized, and the kids had grown up and left, i worked from home for 10 years before retiring. My field was specialist, so most of my clients were a long way away. But some were local, and there was always some lack of privacy. But as most were friends, or became friends, this didn't matter. One cliemnt took exception to me, and I later found out that when she took her dog outside she had let it crap on the step, but this was the only negative experience.
One advantage was if I couldn't sleep I could work in the nght if I wanted to. And of course I didn't have any commutiong time..
One point to watch- as an accountant you will have worked out the imlications for cgt if you move?
My answers
A review of the thread makes it clear that the querist is concerned about care home fees and IHT is not an issue.
Do we have any readers who have dealt with this situation in practice?
and am I right in thinking the present situation arose because a government in the 90's was concerned about the number of ancients blocking the free NHS beds in hospitals, thus giving rise to a lucrative industry?
Avoidance, not evasion!
If she is in care it may well be because she needs more care than an unqualified individual can provide. It might be her own idea.
and what happened to the Government's promise to increase the disregard form £23250, or whatever it is?
I think somewhere the querist said IHT wasn't an issue, presumably because of IHT thresholds.
Why is the care home worry not averted? If the client went into care fairly soon on, then of course she has deprived herself of the asset. But if she was in good physical and mental health when she made the gift, is there a period beyond which it is not included in the donor's estate?
Settlor retains an interest, consequently she is taxed on the rent.
Suppose the settlor has at some time lived in the property and it has been her PPR. This will minimise her cgt. and suppose, for whatever reason, she should at some future date , decide to return to the property? What would be the effect on her income tax then, or on her care home position?
Or avoidance.
Over what period of time would the council consider her to have deprived herself of the asset?
That would no doubt have put you off your lunch.
As I read the query, the request came from the owner's advisers.
Long time since I retired, but are there not inheritance tax consequences of reservation of benefit?
And if the donor is elderly, and needs to go into care, is she still treated as still owning the property when assessing her contribution for her care costs to the local authority on the grounds she is deliberately dissipating her estate?
It is normally preferrable to issue a licence to occupy rooms rather the more formal letting agreeement. The rooms revert to the user if the business ceases.
The owner can use the rooms at night and so PPR is retained. A proportion of interest is deductible if the house is mortgaged. All the costs, including council tax, are proportioned and deducted.
Of course, Mr Marks would be taxable on the rent, but expenses can be decucted, the rent is a charge against CT, and there is no NI on it, nice a nice way of extracting funds.
but it's 4 years since I retired, and this infomatio might be superseded.
a wall between your home and business life
Quite!
I've retired now, but as I had a niche market of computer-literate clients I was advised that they could be hundreds of miles away and still serve them. Initial interviews could be a problem, but at that niche market's annual conference was a good opportunity, or a trip by train (not so much dead time, time to catch up on professional reading).
A colleague in this small town simply refused to see anyone without an appointment. This worked for him. His office was upstairs and no one could get past his receptionist!
No travelling
Working from home is fine if you haven't got children. And if you've got teenagers, forget it!
When I downsized, and the kids had grown up and left, i worked from home for 10 years before retiring. My field was specialist, so most of my clients were a long way away. But some were local, and there was always some lack of privacy. But as most were friends, or became friends, this didn't matter. One cliemnt took exception to me, and I later found out that when she took her dog outside she had let it crap on the step, but this was the only negative experience.
One advantage was if I couldn't sleep I could work in the nght if I wanted to. And of course I didn't have any commutiong time..
One point to watch- as an accountant you will have worked out the imlications for cgt if you move?