Postby AGoodman » Fri Jan 26, 2018 4:38 pm
First, is the value of each child's interest less than £40,000? That would take them out of the regime. I see no reason that the value cannot take into account your prior usufruct.
Second, you could argue that a usufruct should be treated as a trust and, if the children do not have any right to occupy or use the property under the current terms of usufruct, it should not be treated as owned by the children under Sch 4ZA para 11 (Finance Act 2003 as amended). You could well get pushback on this - HMRC treat usufructs as trusts for IHT but not for CGT/IT. There is no great rationale for the difference. I have not seen them taken any position for SDLT.
Third, unlikely to be much help but there is a further exception for jointly inherited property under Sch 4ZA para. 16. It is limited to purchases made within 3 years of inheriting the property.