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Where Taxpayers and Advisers Meet

Evasion or avoidance?

jayhay
Posts:20
Joined:Tue Jun 23, 2009 8:46 pm
Evasion or avoidance?

Postby jayhay » Wed Jan 29, 2014 11:31 am

Would this plan be acceptable to HMRC?
I have a modest buy to let worth in the region of £110,000. I would like to gift it to my grandson (age 9). The rent would help towards his present school fees and later university fees. Obviously it would need to be held in trust for him by his parents until he is 18.
As the rental income is less than a single person’s tax allowance it would appear that he would pay no tax on the rent until such time he commences to earn a salary.
I appreciate that I would have created a PTE and would need to live for 7 years to discharge the PTE.
My main concern however, is that if I should do this, HMRC may deem it evasion rather than avoidance.

section 44
Posts:4467
Joined:Thu Oct 30, 2008 12:47 pm

Re: Evasion or avoidance?

Postby section 44 » Wed Jan 29, 2014 12:00 pm

Its not evasion. However, it might be considered avoidance.

jayhay
Posts:20
Joined:Tue Jun 23, 2009 8:46 pm

Re: Evasion or avoidance?

Postby jayhay » Wed Jan 29, 2014 10:43 pm

Thank you section 44 for your response.

If it is not "evasion" (which I understand is unlawful), then unless this is a case of "avoidance" that HMRC rejects, my gift to my grandson will achieve the result I have anticipated.

I obviously do not wish to incur the expense of transferring the property to my grandson, only to then find the outcome of the gift is overruled by HMRC.

King_Maker
Posts:6538
Joined:Wed Aug 06, 2008 3:22 pm

Re: Evasion or avoidance?

Postby King_Maker » Thu Jan 30, 2014 2:45 pm

IMHO, it is neither evasion nor avoidance.

It is not unusual for a grandparent to want to make gifts to his/her grandchildren.

You will need to review the CGT position.


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