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Where Taxpayers and Advisers Meet

Letting relief and PPR change

Dev_1
Posts: 51
Joined: Sun Jun 18, 2017 4:00 pm

Letting relief and PPR change

Postby Dev_1 » Tue Mar 17, 2020 1:55 pm

Good afternoon,

I would be grateful if someone can confirm the following.

I am due to receive a 50% share of a property with no consideration, gift.

This transfer will make me sole owner after the transfer is completed.

To ensure that this takes place prior to letting relief and PPR changes.

Would the land registry title need to be changed and updated prior to 6th April 2020 to ensure these reliefs are still honoured or as this is a transfer and therefore no exchange of contracts would completion effectively be the date of the disposal to ensure we are on time for both reliefs.

Our solicitor has said this is a transfer so no exchange of contracts which I get. But everywhere online I look they say to ensure you get the letting relief and PPR you need to exchange contracts by 5th April 2020.

In our case do we just need to ensure we complete before 6th April irrespective on when the land registry title actually gets updated?.

Thanks

wamstax
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Re: Letting relief and PPR change

Postby wamstax » Tue Mar 17, 2020 2:36 pm

Not sure what relevance you think this will have to you as you are the transferee and acquirer and PPR and Lettings relief only applies at the point of disposal. If they change the rules again in the future it could be the withdrawal of PPR or Lettings Relief in which case you wouldn’t qualify anyway
regards and hope this helps
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maths
Posts: 7894
Joined: Wed Aug 06, 2008 3:25 pm

Re: Letting relief and PPR change

Postby maths » Tue Mar 17, 2020 3:27 pm

Not sure what is trying to be achieved or the relationship between donor and donee?

The changes effective 6 April 2020 means that if a sale is to take place better to arrange for "exchange" to take place on or before 5 April 2020.

However, not sure how current PPR and LR can be preserved.

If a gift of 50% is intended then by doing this pre 6 April 2020 then PPR and LR will be maximised for the donor whilst providing the donee with a higher base cost for CGT with respect to any future sale (but the current PPR/LR regimes will no longer apply on a further sale buy the donee of his/her 50% as warmstax comments).

Dev_1
Posts: 51
Joined: Sun Jun 18, 2017 4:00 pm

Re: Letting relief and PPR change

Postby Dev_1 » Tue Mar 17, 2020 3:51 pm

Hello,

Thank you for your comments.

I should have explained better.

My mother is gifting her remaining 50% share or her former home which is now let. This property concerned we both currently own as tenants in common. She is simply gifting her remaining share to me.

Solicitor are in the process of transferring her remaining 50% to me.

In relation to her CGT on her disposal of this remaining share I understand that there is no CGT based on the calculations.

I am aware of the changes in relation to PPR and lettings relief due to come into effect after April 6th.

I’m simply trying to find out that for this transfer which would be a disposal for my mother, to benefit prior to the change of the PPR and lettings relief for my mother on this transfer would this need to completed and updated on the title prior to 6th April?. Or would completion suffice and then the title can be updated as to update the title may take a week or so after completing so getting the title updated may take us past 6th April but we would have completed?.

Thanks in advance.

I hope this makes sense.

Kind regards

maths
Posts: 7894
Joined: Wed Aug 06, 2008 3:25 pm

Re: Letting relief and PPR change

Postby maths » Tue Mar 17, 2020 3:53 pm

Should have added that the donor could simply execute a declaration of trust under which he retains legal title but henceforth the legal title is held for the donor and donee beneficially 50/50% immediately and no "exchange" is necessary.

Following the Declaration all that is then required is that the Land Registry details be updated.

Dev_1
Posts: 51
Joined: Sun Jun 18, 2017 4:00 pm

Re: Letting relief and PPR change

Postby Dev_1 » Tue Mar 17, 2020 4:41 pm

Hi maths,

Thank you for hot reply.

But in relation to my query any advice in relation to that?.

We just want to make sure we are not caught by whether completion takes place or if land registry would also need to be updated prior to 6th April.

Thanks
Anil

Dev_1
Posts: 51
Joined: Sun Jun 18, 2017 4:00 pm

Re: Letting relief and PPR change

Postby Dev_1 » Tue Mar 17, 2020 6:22 pm

Hello,

Would someone please able to clarify for me as this is starting to worry me.

Any help as always greatly appreciated.
Thanks

maths
Posts: 7894
Joined: Wed Aug 06, 2008 3:25 pm

Re: Letting relief and PPR change

Postby maths » Tue Mar 17, 2020 7:54 pm

For CGT it is a transfer of the beneficial interest in the property which needs to be effected on or before 5 April 2020.

As it is a gift of 50% of the beneficial interest no "exchange" (referred to in my earlier post) is necessary and thus the date of exchange is irrelevant in your case.

All that is necessary is that your mother and you have signed all relevant paperwork pre 6 April 2020. One this is done your mother will for CGT purposes have transferred her 50%.

Land Registry (LR) deals with transfers of legal interests (ie title) not beneficial interests. Ideally documents should be lodge with the LR asap but it is not necessary that lodgement occurs pre 6 April 2020 for your mother's 50% beneficial interest to be transferred for CGT.


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