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IHT400 and associated forms query (GWROB)
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Donald Bedford
Posted: 19 August 2018 13:34:55(UTC)
#21

Joined: 30/05/2018(UTC)
Posts: 13
Hi Sam

Super-fast response, thanks!

To clarify ...

We (my wife and I) sold our house in 1996 and so did my mother (sell her separate house that is), also in 1996.

We pooled our monies and bought one house in 1996 and all three of our names - my wife's, my mother's and mine - appeared on the deeds. We all lived together in the house (it was our 'sole residence' for all three of us - no other property was owned) from its purchase in 1996 until my mother died in April this year. My wife and I are still married and still live in the same house - the family home and sole residence.

In 2013, my mother 'gifted' her part of the house to us and this was done through her solicitor as a 'Gift with a reservation of benefit' - the benefit being that she was to continue to live in the property (rent free) until either (a) all three of us sold the house together or (b) she died.

I gather from a post by Alan Selwood that, quote: "if you give away part of an asset but continue to enjoy some benefit from it, the IHT 7-year clock for Potentially Exempt Transfers never starts ticking."

So, the 'gift' never happened as far as IHT goes and her 44% share of the house remained as part of her estate.

I am now worried that perhaps there is some liability for CGT?

Hope that helps,

Don
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Samual Saunders
Posted: 19 August 2018 17:12:10(UTC)
#22

Joined: 15/04/2018(UTC)
Posts: 194
NO LIABILITY

You have clarified now that you all purchased the house and lived there together. As such, when she died, her part would have passed to the remaining joint owners and continue without liability to capital gains tax on the part owned and lived in by her, so I believe that n liability exists in this case.

Happy days

Sam
same answer as your second question repeated.
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Donald Bedford
Posted: 21 August 2018 16:06:36(UTC)
#23

Joined: 30/05/2018(UTC)
Posts: 13
Many thanks Sam.

That is somewhat reassuring, of course it all depends on the views of HMRC!

I'm waiting to see what HMRC ultimately decide as to both IHT (no liability in my view) and GCT (of which I am rather clueless).

Fingernails are getting shorter ...

Cheers,

Don
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jeffian
Posted: 21 August 2018 19:03:18(UTC)
#24

Joined: 09/03/2011(UTC)
Posts: 954
Donald,

I have just re-read your original post and notice the following -

"Putting the values from these schedules (IHT403, IHT409 and IHT411) together with the small amount in her bank accounts (IHT406), a small amount of Household and Personal Goods (IHT407) and Life Assurance Policies (IHT410) is giving an inheritance tax liability (in box 119 the foot of page 12) as £8,400.

As her whole estate (her 44% share of the house at today's market value, plus the amounts in her bank accounts, the value of her shares and her personal possessions) totals around £240,000, so the inheritance tax figure of £8,400 is obviously wrong..."

In your first paragraph you mention Life Assurance policies and in the second one you don't. Unless written in trust for someone else on death, the value of Life Assurance policies form part of the Estate. As I previously pointed out to you, the IHT estimate of £8,400 equates to an estate of £346,000. I don't suppose the Life Policies were worth £106,000 were they?!
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Donald Bedford
Posted: 22 August 2018 16:09:49(UTC)
#25

Joined: 30/05/2018(UTC)
Posts: 13
Hi Jeffian

Short answer is no.

Anyhow, form is filled in (to the best of my ability) and has been sent to HMRC.

I await seeing what Her Majesty's finest come up with!

Don
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Mike Hovit
Posted: 06 January 2019 17:50:40(UTC)
#27

Joined: 06/01/2019(UTC)
Posts: 1
Don,

May have been covered before but be careful if you are thinking about 'taper relief'. It only applies AFTER you have used up the personal allowance (325k+) with previous gifts within the 7 years. So, yes, you have to gift 325k+ with the 7 years and taper relief then applies (only) to any further gifts within the 7 - 4 year period.

Given that few of us can afford to give away significantly more than 325k, I call it 'Millionaire's Taper Relief'.

A fine example of a tax goodie principle (Taper Relief) that, in practice, is denied ordinary people and reserved for the seriously rich.
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