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Where Taxpayers and Advisers Meet

Please help

Joined:Thu Sep 01, 2016 5:11 pm
Please help

Postby sunny2016 » Fri May 24, 2019 9:32 pm

I looked for an appropriate forum but was unable to find one so here it goes.

I gifted close to 400k in cash to our son and daughter for their deposit for a new house. This was mid last year
a gift from me and their mother.

I'm filling in a self-assessment tax return for self and children's mummy.


Where do I record the gifts on the self-assess? (I did write out a note signed by all of us re cash gifts
and this details when and which banks the money came from and went to our kids)

In January we gifted to our son and daughter an apartment that we had bought for cash and rented out and made a 45k profits
having removed costs ie stamp, solicitors etc. At the time we got a valuation from the letting agent. Can I use this for the self-assessment?

Thanks in advance



Joined:Wed Aug 02, 2017 9:09 pm

Re: Please help

Postby darthblingbling » Fri May 24, 2019 11:14 pm

Just make sure you don't die within 7 years and you'll be right as rain my pedigree chum.

Joined:Wed Feb 08, 2017 2:33 pm

Re: Please help

Postby AnthonyR » Wed May 29, 2019 5:56 pm

As DarthBling says, the cash gift doesn't need to be disclosed unless you die within 7 years. It's a Potentially Exempt Transfer (PET) which becomes exempt after 7 years. However, you should make a record of the gift somewhere your executors can find (less of an issue if your children are your executors).

The apartment will be a disposal for capital gains tax purposes. As it's a gift to a connected party it will be treated as if you'd sold it to them for market value. Assuming the valuation is reasonable you can use this for the basis of your capital gains tax calculation, although HMRC prefer a surveyor's valuation and potentially could seek to challenge the valuation it's often not cost effective to obtain one for smaller transactions. This disposal does need to go on your tax return if you made a £45k profit, although if it was jointly owned you'll get to also deduct your annual exemption each, which will reduce the taxable gain.

You should also make a note of this as well, as it will need to be included in your estate if you die within 7 years. The other thing to bear in mind is that if this is a holiday apartment and you use it personally then it may not be effective for IHT purposes as you will have retained a benefit. If your kids use it and you occasionally visit them for lunch or to stay the night then that's probably OK, but staying there for a week or on your own is likely to result in it remaining taxable. You can pay your kids rent and this will negate the benefit (although this will be taxable income for the kids).
Anthony Rogers LLB CTA TEP
Fusion Partners LLP

Return to “Inheritance Tax, IHT, Trusts & Estates, Capital Taxes”