CGT and IHT

[fabs35]

Dear All

Could anyone please help with any of the questions below:

1)How large can an annual PET be (both in terms of total and individual gifts?)

2)What's the current Annual exemption (for IHT)?

3)If a property (not main residence) is transferred from mother to daughter, is CGT payable and by whom?

4)Can Sch. A income be declared for a student even if the property is in her mother's name (ie to use up the daughters personal allowance)?

5)If the property is put into a trust which states that the property is to be given to the daughter upon the mothers death, is any tax payable and if so, will it be IHT and/or CGT and when?

Kind regards, Fabs35

[accountant@uktaxshop]

Forgive if I sound rather rude, but what exactly are you trying to do?

Im guessing you are attempting some DIY IHT planning, which could prove rather expensive.

There are a number of outcomes here depending on the facts and what is actually done, however in answer to your list:

1. Strictly none
2. 255k
3. Depends how its done.
4. No
5. Possibly, depending how its done. No to both if its done properly.

If you need some proper advice please let me know. I can give you outline advice, or refer you to a specialist for IHT/trust planning.

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436

[fabs35]

Am an accountant (although, obviously not in practice/tax) and I'm trying to look for the best possible outcome for the situation - just looking for a few facts before I carry out a more research.

Re 1)....not sure you understand - what I meant to say was how much can you gift an individual (not spouse) and treat it as a PET - is there a limit ie with the whole amount not being liable to tax after seven years.

Re 2) Was not referring to initial tax free estate. Thought it was around £3k pa.

Re 4) What is the best way of using up the daughters PA with regards to Sch A?

Thanks

[fabs35]

Is this a forum for dicussion/exchange of ideas or just a forum for people to advertise their services???

[Ian McTernan CTA]

Dear fabs35,

I feel James has given you a fair answer in view of the questions you asked- this is a forum for people to get answers to their queries, not a way of getting free advice to very complex subjects or just a method of posting up a variety of questions and exploring ideas. If you want answers to something more specific then you way get them, but please bear in mind we have to make a living and are not paid to answer these questions, so the time we give freely here means we are not earning money elsewhere.

The types of question you have raised require much more detail in terms of who is involved, the amounts involved, the ages, the rest of their estates, what they actually want to achieve (as opposed to what they think they want), etc, etc., before a proper answer can be given, and obviously just as you don't provide your services to whoever you work for for free neither do we.

IHT and CGT are complex subjects and professional advice should always be sought before entering into anything, and unfortunately this usually costs money to get!

To answer your queries,
1. No limit- you can transfer as much as you want, except to someone resident overseas, and provided you live seven years then the gift falls completely out of your estate and no IHT is payable on your death. There is a sliding scale applied before the end of the seven year period, and there are insurance schemes available to cover potential IHT bills based on this sliding scale.
2. You are correct, annual exemption is £3K, you can usually use this years and last, there are also a number of other exemptions available eg on marriage, etc.
3. Would be a PET in any case, but there are various schemes and methods to achieve the transfer so without more details impossible to answer.
4. This is caught by the settlements legislation and is deemed to be income of the mother. Dependent on the student's age, you can achieve this but this involves some planning and the student must actually receive and keep the money.
5. The answer depends on a number of factors, not least of which is which property is concerned, the type of trust arrangement envisaged, and what you are trying to achieve.

With apologies if I have broken the rules of the forum with the outburst above, and apologies if this upsets you in any way- my email address is below if you wish to discuss it 'privately'.

Ian McTernan CTA
McTernan Associates Ltd
Chartered Tax Advisers
ian@imcternan.com

[fabs35]

Dear Ian

Thank you for your more detailed reply. I had found this website having searched the web for a tax forum. I was actually looking for somewhere where there would be an exchange of ideas - not necessarily free advice. I was not aware that this was a forum used to advertise services.

Once again, thank you for your help, no offence taken.

Regards, Fabs.

[fabs35]

Dear Ian

Thank you for your more detailed reply. I had found this website having searched the web for a tax forum. I was actually looking for somewhere where there would be an exchange of ideas - not necessarily free advice. I was not aware that this was a forum used to advertise services.

Once again, thank you for your help, no offence taken.

Regards, Fabs.