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We have served generations of individuals and local businesses, providing comprehensive legal advice.
Passing Property and Gifting in Life and on Death
There are a myriad of issues surrounding the gifting of property and other assets during your lifetime, most tax related, which need to be fully explored to avoid creating an unnecessary tax burden for yourself or your beneficiaries. Amongst the most common issues on which we are asked to advise in relation to both Lifetime and Testamentary Gifting (by Will), are:
- Personal Annual gifting allowances;
- Potentially Exempt Transfers – gifts of cash or other assets which, if survived seven years by the donor, may be exempt from Inheritance Tax and excluded from the value of the donor’s estate;
- Regular Gifts out of income – a scheme which can, with compliance to HMRC requirements and detailed record-keeping, allow a donor to make regular gifts to one or more chargeable beneficiary from excess income which may be excluded from the value of their estate;
- Reservation of Benefit – a key issue for those donors who gift an asset, or a share in an asset, but retain a benefit in the gifted item. Whether this is a holiday home gifted to children which is still used by the donor; a buy-to-let property gifted into the names of a spouse or children where the rental income is retained by the original donor; or half a matrimonial home gifted to children by the first spouse to die leaving the surviving spouse living in the entire property but sharing ownership with their children;
- Transferrable Nil Rate Band Allowances – The scheme allows the transfer of unused nil rate band allowance from the first spouse of civil partner to die, on production of the necessary documentation to evidence both the marital/civil partner status and the value of the nil rate band being passed across. Where the entire estate has passed to the surviving spouse or civil partner without deduction of any legacies to chargeable beneficiaries or previous chargeable transfers or gifts, a full 100% allowance can be transferred to the surviving spouse. An excellent additional tax free allowance that should be claimed wherever possible, and for which purpose we advise the preservation of the necessary paperwork to evidence the claim; and
- New Principal Private Residence Tax Allowances – fully in force by 2020, please see the recent article on this site by Judith Bleetman on this subject
We advise all clients to carefully consider the potential tax consequences of their gifts, and to seek detailed professional advice before making decisions which might result in a significant tax burden. Our team of expert lawyers can assist with advice on any of the areas above.