Tax Forum :: Free Tax Advice

Hi,

Just wondered if anyone can help with this scenario?

Person A owns a flat and wants to add Person B to the title. There is no mortgage in place and no money is changing hands. Am I right in thinking there is no SDLT due?

Cheers

Paul

Yes

Thank you. Is there any potential IHT liability here?

Additional info;

Flat is worth approximately £250k
Person a and b are mother and son
Son is sole beneficiary in mothers will

Who lives in the house?

Just person A

Just adding son to the legal title does not create any SDLT or IHT consequences assuming that there is no transfer of any of mother's beneficial interest at the same time.

Is the intention to transfer to the son any beneficial interest?

Great, thanks.

No change in beneficial interest initially but may be further down the line if property is let. Would then want the rent to be payable to the Son (guessing via Form 17/Declaration of Trust).

You will need a declaration of trust when you put B on the deeds. The deed will say that A & B hold title for the sole benefit of A.

If the deed is amended to give B 100% beneficial interest, you will have a gift with reservation of benefit, so it will remain in A's estate for as a long as A lives there. Once A moves out it will become a PET for 7 years.

Form 17 is not appropriate because A & B cannot be married (or be in a civil partnership.)

Thanks again.

With regards the PET, if the estate is worth less than £325,000, does that effectively mean if Person A dies within 7 years then no IHT will be payable anyway?

Yes. A PET just means that the gift remains part of the estate for 7 years.