Interesting IHT planning with classic cars, will it work?
Discussion
If the V5 form is not title of ownership then that in itself should not be the sole reason for an executor to include that asset in the deceased's estate. However, despite the PET in place, if the deceased's name is still on the V5 form, it does give HMRC a stick to beat the Exor with.
If donor transferred reregistered the cars into the beneficiaries' names, is he then worried that he no longer owns them? In which case he is treating the V5 firm as title of ownership!
If donor reregd the cars but continued to use them as a named driver on a family policy, HMRC would have to carry out a forensic examination to prove any reservation with the PET.
Also, what happens with the V5 forms when the registered keeper dies? Does the DVLA require a grant of probate to reregister title of ownership into the beneficiary's name?
The example of this process that I heard of required the transfer of the V5 form into the beneficiary's name whilst donor continued to store and enjoy the cars while he was still alive. I understand it was straight forward for the Exors and the value of said cars was over £1 million at the time.
I would say that there is an opportunity with this process for a modest IHT saving which would not be of much interest to HMRC. but if one sold one's mansion, reinvested in a fleet of classics all earmarked for beneficiaries but still regd in donor's name, I would imagine HMRC would like to delve a little deeper into the paperwork.
JB
If donor transferred reregistered the cars into the beneficiaries' names, is he then worried that he no longer owns them? In which case he is treating the V5 firm as title of ownership!
If donor reregd the cars but continued to use them as a named driver on a family policy, HMRC would have to carry out a forensic examination to prove any reservation with the PET.
Also, what happens with the V5 forms when the registered keeper dies? Does the DVLA require a grant of probate to reregister title of ownership into the beneficiary's name?
The example of this process that I heard of required the transfer of the V5 form into the beneficiary's name whilst donor continued to store and enjoy the cars while he was still alive. I understand it was straight forward for the Exors and the value of said cars was over £1 million at the time.
I would say that there is an opportunity with this process for a modest IHT saving which would not be of much interest to HMRC. but if one sold one's mansion, reinvested in a fleet of classics all earmarked for beneficiaries but still regd in donor's name, I would imagine HMRC would like to delve a little deeper into the paperwork.
JB
jfbrin said:
If the V5 form is not title of ownership then that in itself should not be the sole reason for an executor to include that asset in the deceased's estate. However, despite the PET in place, if the deceased's name is still on the V5 form, it does give HMRC a stick to beat the Exor with.
If donor transferred reregistered the cars into the beneficiaries' names, is he then worried that he no longer owns them? In which case he is treating the V5 firm as title of ownership!
If donor reregd the cars but continued to use them as a named driver on a family policy, HMRC would have to carry out a forensic examination to prove any reservation with the PET.
Also, what happens with the V5 forms when the registered keeper dies? Does the DVLA require a grant of probate to reregister title of ownership into the beneficiary's name?
The example of this process that I heard of required the transfer of the V5 form into the beneficiary's name whilst donor continued to store and enjoy the cars while he was still alive. I understand it was straight forward for the Exors and the value of said cars was over £1 million at the time.
I would say that there is an opportunity with this process for a modest IHT saving which would not be of much interest to HMRC. but if one sold one's mansion, reinvested in a fleet of classics all earmarked for beneficiaries but still regd in donor's name, I would imagine HMRC would like to delve a little deeper into the paperwork.
JB
He is not worried about still 'owning' the cars, but still enjoys using them and has no desire to deprive himself of that. He is quite happy for legal ownership to pass to beneficiaries and indeed for V5s to be transferred to beneficiaries... he was only intending to remain registered keeper for the sake of vehicle administration ease, it isn't a necessity. If donor transferred reregistered the cars into the beneficiaries' names, is he then worried that he no longer owns them? In which case he is treating the V5 firm as title of ownership!
If donor reregd the cars but continued to use them as a named driver on a family policy, HMRC would have to carry out a forensic examination to prove any reservation with the PET.
Also, what happens with the V5 forms when the registered keeper dies? Does the DVLA require a grant of probate to reregister title of ownership into the beneficiary's name?
The example of this process that I heard of required the transfer of the V5 form into the beneficiary's name whilst donor continued to store and enjoy the cars while he was still alive. I understand it was straight forward for the Exors and the value of said cars was over £1 million at the time.
I would say that there is an opportunity with this process for a modest IHT saving which would not be of much interest to HMRC. but if one sold one's mansion, reinvested in a fleet of classics all earmarked for beneficiaries but still regd in donor's name, I would imagine HMRC would like to delve a little deeper into the paperwork.
JB
As I understand it, upon death the V5 is essentially reregistered into either the name of the deceased's executors or whoever is the new keeper at the direction of the executor. The DVLA have no requirement for Grant of Probate (or even to see a Death Certificate) so it is essentially administered as part of the estate at the discretion of the executor.
I would be interested to hear more of the example you outlined, if you have any more detail.
balls-out said:
Clearly he has done well out of society to have such assets.
Tell him to pay his taxes rather than look to put the burden of paying for our society onto those less able to afford it.
Really?!! Did you actually mean to type that? Tell him to pay his taxes rather than look to put the burden of paying for our society onto those less able to afford it.
Lest we forget, IHT is an OPTIONAL tax - any individual whose estate may be subject to IHT has the option of using perfectly legal and proven strategies to reduce their potential liability to fall within the nil rate band. This individual has done well out of society because he has worked hard! Far harder and for far longer than the majority of 'those less able to afford it'.... yet whilst he has been doing that and doing 'well out of society' he has contributed and given back far more than could possibly be expected - I know for a fact he has given up his own time to chair charities, boards of governors, fundraising events and numerous other worthy causes that the less generous turned their back on... as well as dipping into his own pocket to help 'those less able to afford it'. His contribution to society is enormous, enviably so, and undoubtedly something to seek to emulate - to suggest that he should 'pay his taxes rather than look to put the burden of paying for our society onto those less able to afford it' is, at best, misguided as you are not in possession of the facts. He has already 'paid' far more to society than his 'fair share' in more ways than one.....
If the Revenue challenged this, on what's still a relatively small estate they may well not, I think they'd argue that you do not need to be the driver or insured etc. to have continued to enjoy a benefit from these cars. For example, this arrangement wouldn't stop him being a passenger whenever he requested. In which case, the revenue would say that it was a gift with reservation.
I'd say that they needed to be an outright gift, certainly with no continuing paperwork connection whatsoever with himself. The gift itself needs to be fully documented and of course he then needs to survive another 7 years.
As an aside, depending on the value of the house at the time of his wife's death, he may still have part of her NRB that his estate can utilise.
I'd say that they needed to be an outright gift, certainly with no continuing paperwork connection whatsoever with himself. The gift itself needs to be fully documented and of course he then needs to survive another 7 years.
As an aside, depending on the value of the house at the time of his wife's death, he may still have part of her NRB that his estate can utilise.
balls-out said:
Clearly he has done well out of society to have such assets.
Tell him to pay his taxes rather than look to put the burden of paying for our society onto those less able to afford it.
Clearly, society has done well out of all the taxes he has paid and he has no doubt made a much bigger contribution than many of those 'less able to afford it' already, but no doubt the work shy and feckless will want another slice when he passes.Tell him to pay his taxes rather than look to put the burden of paying for our society onto those less able to afford it.
Good luck to him and anyone else who avoids this iniquitous burden.
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