Partial transfer to children

[Yiannis17]

Afternoon

I have a situation here where a father wishes to transfer 15% of his property onto his children. This is something he wishes to do over the next few years as he wants to get the property off his name. The property is a Shop with flats above.

There is currently a mortgage on the property on joint names with his ex wife.

Will this effect the transfer at all?

[ATV Accountants]

Good Afternoon.

As you want to transfer 15% of your property share to your children but this need to be declare in personal tax return of your children. if they are over 18 they can register their self for SA (Self Assessment). If they are under 18 than the best way to transfer is establish trust as a settler and you can add your children as beneficiary, this will help you a lot in future regarding inheritance tax as well.

For rates plz visit: https://www.gov.uk/trusts-taxes/trusts-and-income-tax

[Lambs]

Y,

In the absence of any particular reliefs, then there will be CGT on any gift of an interest in a property, based on the market value of the interest transferred.

The fact that it is a gift does not prevent a charge to CGT.

Transfers between spouses / civil partners who are living together as a couple will suffer no CGT but that special treatment does not apply to transfers between other family relatives, etc.

You cannot transfer an interest in real property to children under the age of 18. That is a legal thing rather than a tax thing. Whether they are minors or adults will strongly influence the choices open to you at this stage.

There may also be SDLT implications in relation to the mortgage as it will be deemed consideration if the recipient(s) also take on / share responsibility for the mortgage.

At face value, one might use a Trust, or transfer to a company and slowly gift shares in the company to the children over the coming years. Either option (there may well be others) would require careful planning.

With regards,

Lambs