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Where Taxpayers and Advisers Meet

IHT on field rented from donor

taxiscomplicated
Posts:12
Joined:Tue Nov 16, 2010 6:58 am
IHT on field rented from donor

Postby taxiscomplicated » Sun Nov 04, 2018 5:44 pm

I rent a field from my mother. She will leave it to me in her will. It is not being used for agriculture any more (small livery yard with horses on it now) so no APR available, and no BPR available as the landlord is not running the business. Would transferring ownership to me as a PET be a good idea, or are there other ways to reduce the IHT? (Mum is 73 and very well).

My mother still wants to recieve the rent while she is alive, can I 'gift' the rent to her annually if she has transferred the land to me in the PET, or does that look odd to HMRC?

Thank you

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: IHT on field rented from donor

Postby AGoodman » Mon Nov 05, 2018 1:23 pm

Could make sense but there is a balance to be struck. The gift will be a deemed sale at market value for CGT so any gain could be brought into charge.

If you gift the income back to her, this will be a reservation of benefit so it would remain within her estate - the worst of both worlds.

taxiscomplicated
Posts:12
Joined:Tue Nov 16, 2010 6:58 am

Re: IHT on field rented from donor

Postby taxiscomplicated » Tue Nov 06, 2018 11:17 am

I did wonder about the reservation of benefits.

The field was only inherited by my mother three years ago, so there is no CGT accrued. It is worth about £50k at its inherited value.

If parents give children gifts in PET form does HMRC then look at all monies returning to the parent as suspicious and as 'benefits'? If she gave me the field at what point could we give Mum money as a gift? (Her partner may pass away shortly, reducing her income level).

Many thanks.

taxiscomplicated
Posts:12
Joined:Tue Nov 16, 2010 6:58 am

Re: IHT on field rented from donor

Postby taxiscomplicated » Tue Nov 06, 2018 11:20 am

I'm wondering if me buying it from her might be more straightforward. I want to be able to give Mum money in the future without creating complications in her estate planning.

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: IHT on field rented from donor

Postby AGoodman » Wed Nov 07, 2018 4:21 pm

1. Possibly - of course IHT is mostly self assessment. (I don’t advise on “will they find out”).
2. An unconnected gift from other monies is probably fine
3. Buying also fine

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: IHT on field rented from donor

Postby AdamS93 » Wed Nov 07, 2018 5:43 pm

Depending on the size of your mothers (and her partners) estate, the current arrangement may be the best way moving forward.

There is only so much one can advise without the full picture.


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