Tax & IHT guidance - Intelligent Money Private Clients
Discussion
Jockman said:
Agreed. One of you will still own a second property on the date of purchase and it looks like that will suffice to tip you into higher rate SDLT.
Found this which says that if one has a property then it is all at the higher rate!"Buying with someone else
The rules apply to each person (and their spouse) who is buying the property.
If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole."
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
IJWS15 said:
Found this which says that if one has a property then it is all at the higher rate!
"Buying with someone else
The rules apply to each person (and their spouse) who is buying the property.
If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole."
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
Further down that page it says:"Buying with someone else
The rules apply to each person (and their spouse) who is buying the property.
If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole."
https://www.gov.uk/guidance/stamp-duty-land-tax-bu...
"When the higher rates do not apply
The higher rates do not apply to certain people, property and transactions.
People
Do not include anyone who will both:
use your new property as their main home
have sold or given away the last main home they owned before you buy your new home (or on the same day)"
IJWS15 said:
Just about to add that, couldn't be more ambiguous could it!
What's ambiguous about it\?Based on what you've written I think your only issue is whether your son ever occupied his rental as his main residence.
I am not an expert.
There have been reported problems with conveyancers / solicitors telling people they have to pay higher rate and once they dig their heels in it's difficult to correct it.
Sheepshanks said:
What's ambiguous about it\?
Based on what you've written I think your only issue is whether your son ever occupied his rental as his main residence.
I am not an expert.
There have been reported problems with conveyancers / solicitors telling people they have to pay higher rate and once they dig their heels in it's difficult to correct it.
Rental or occupation of the property is immaterial. Are you confusing this with CGT?Based on what you've written I think your only issue is whether your son ever occupied his rental as his main residence.
I am not an expert.
There have been reported problems with conveyancers / solicitors telling people they have to pay higher rate and once they dig their heels in it's difficult to correct it.
It is the ownership that is the key.
If you will own more than one property at the end of the transaction then SDLT will be charged at the higher rate.
Sheepshanks said:
What's ambiguous about it\?."…….
There have been reported problems with conveyancers / solicitors telling people they have to pay higher rate and once they dig their heels in it's difficult to correct it.
One part says :There have been reported problems with conveyancers / solicitors telling people they have to pay higher rate and once they dig their heels in it's difficult to correct it.
"Buying with someone else
“If any of you individually have to pay the higher rates, you must pay the higher rates for the transaction as a whole."
So we all pay the higher rate….
Further down that page it says:
“Do not include anyone who will both:
use your new property as their main home
have sold or given away the last main home they owned before you buy your new home (or on the same day)"
So I don’t pay the higher rate……
The new property will be our main home and it will be his families main home.
The second home is in his wife’s name and I don’t believe either have ever lived there.
IJWS15 said:
The new property will be our main home and it will be his families main home.
The second home is in his wife’s name and I don’t believe either have ever lived there.
You said he owned it. Now it’s his wife who owns it?The second home is in his wife’s name and I don’t believe either have ever lived there.
Either way, him and his wife are regarded as a single entity by HMRC.
So higher rate SDLT will still be due.
Jockman said:
Rental or occupation of the property is immaterial. Are you confusing this with CGT?
It is the ownership that is the key.
If you will own more than one property at the end of the transaction then SDLT will be charged at the higher rate.
Not if your changing your main home for another main home. That's why the "main home" phrase is there. Otherwise it would just say "property".It is the ownership that is the key.
If you will own more than one property at the end of the transaction then SDLT will be charged at the higher rate.
A complication arises if the rental house has previously been your main home.
It's also complicated if the OP introduces a different / additional owner later on in the thread!
Sheepshanks said:
Jockman said:
Are you saying there is the possibility here of someone having TWO Primary Residencies?
No! And now you're introducing CGT terms. 
OP said both parties are selling their main homes.
Yeah I got that bit. We know about the 3 year rule about primary residence etc.
The rented property seems to be the issue and I >thought< you were saying this could be affected by whether or not it had previously been a PR.
The angle I’m coming at is once the new property is bought AND the two Primary Residencies are sold……will ANY party to the transaction have ownership of another property.
If the answer is yes (as in this case) then higher rate SDLT is payable.
Jockman said:
The angle I’m coming at is once the new property is bought AND the two Primary Residencies are sold……will ANY party to the transaction have ownership of another property.
If the answer is yes (as in this case) then higher rate SDLT is payable.
I think higher SDLT in not payable. Because the answer is yes. Doesn't matter how many other properties they already own.If the answer is yes (as in this case) then higher rate SDLT is payable.
It's an bit of an anomaly that If it was the other way around - keeping main home and buying your first rental - then higher rate would be payable on the rental.
Jockman said:
No problem. It’s ok to disagree.
Back from lunch... and re-reading - I feel I should clarify that the reason higher rate SDLT isn't due is not because the answer to your question is "yes", it's because they're buying a new main home having sold their previous main homes.Both selling main homes and buying single property.
Rental home not changing ownership and wife may have lived there as a child (30 years ago) but I am not sure - property was in the family and at one point a long time ago the family did live there, not sure if present owner was born when they did.
Rental home not changing ownership and wife may have lived there as a child (30 years ago) but I am not sure - property was in the family and at one point a long time ago the family did live there, not sure if present owner was born when they did.
Out of curiosity.....
I believe that the Estate is liable for IHT. What happens in a situation where somebody gifts away all their assets within the 7 years prior to death and there is nothing (or very little) remaining in their Estate? Does the Administrator go back to the beneficiaries and ask them to stump up for the IHT? They would need to go back through the deceased's bank statements as well as Land registry to firstly identify whom the assets had been gifted to and then potentially take legal action to recover the money to pay the IHT (as well as the costs of legal action).
In short, it seems awfully complicated and quite costly
I believe that the Estate is liable for IHT. What happens in a situation where somebody gifts away all their assets within the 7 years prior to death and there is nothing (or very little) remaining in their Estate? Does the Administrator go back to the beneficiaries and ask them to stump up for the IHT? They would need to go back through the deceased's bank statements as well as Land registry to firstly identify whom the assets had been gifted to and then potentially take legal action to recover the money to pay the IHT (as well as the costs of legal action).
In short, it seems awfully complicated and quite costly
Countdown said:
Out of curiosity.....
I believe that the Estate is liable for IHT. What happens in a situation where somebody gifts away all their assets within the 7 years prior to death and there is nothing (or very little) remaining in their Estate? Does the Administrator go back to the beneficiaries and ask them to stump up for the IHT? They would need to go back through the deceased's bank statements as well as Land registry to firstly identify whom the assets had been gifted to and then potentially take legal action to recover the money to pay the IHT (as well as the costs of legal action).
In short, it seems awfully complicated and quite costly
I'm dealing with this at the moment...I believe that the Estate is liable for IHT. What happens in a situation where somebody gifts away all their assets within the 7 years prior to death and there is nothing (or very little) remaining in their Estate? Does the Administrator go back to the beneficiaries and ask them to stump up for the IHT? They would need to go back through the deceased's bank statements as well as Land registry to firstly identify whom the assets had been gifted to and then potentially take legal action to recover the money to pay the IHT (as well as the costs of legal action).
In short, it seems awfully complicated and quite costly
AIUI...
The Executors (if there is a will) or the Administrators (if there is no will) are required to deliver to the Inland Revenue an Inland Revenue Account that contains a list of the assets and liabilities, and also a list of any gifts made during the last seven years.
If there are any "mistakes" on the form, the Exectutors or Administrators are liable.
The Inland Revenue will check the form and decide whether to issue a Grant of Probate. The Grant of Probate (or Grant of Letters of Administration) will show what taxes are due, and from whom. Most of the time, taxes will come from the estate, but not always.
If a gift falls outside the "potentially exempt transfers", the recipient is due for the tax on the gift...
https://www.brewin.co.uk/insights/tax-efficient-gi...
https://www.rochelegal.co.uk/resources/help-guides...
pingu393 said:
I'm dealing with this at the moment...
AIUI...
The Executors (if there is a will) or the Administrators (if there is no will) are required to deliver to the Inland Revenue an Inland Revenue Account that contains a list of the assets and liabilities, and also a list of any gifts made during the last seven years.
If there are any "mistakes" on the form, the Exectutors or Administrators are liable.
The Inland Revenue will check the form and decide whether to issue a Grant of Probate. The Grant of Probate (or Grant of Letters of Administration) will show what taxes are due, and from whom. Most of the time, taxes will come from the estate, but not always.
If a gift falls outside the "potentially exempt transfers", the recipient is due for the tax on the gift...
https://www.brewin.co.uk/insights/tax-efficient-gi...
https://www.rochelegal.co.uk/resources/help-guides...
Interesting - thanks.AIUI...
The Executors (if there is a will) or the Administrators (if there is no will) are required to deliver to the Inland Revenue an Inland Revenue Account that contains a list of the assets and liabilities, and also a list of any gifts made during the last seven years.
If there are any "mistakes" on the form, the Exectutors or Administrators are liable.
The Inland Revenue will check the form and decide whether to issue a Grant of Probate. The Grant of Probate (or Grant of Letters of Administration) will show what taxes are due, and from whom. Most of the time, taxes will come from the estate, but not always.
If a gift falls outside the "potentially exempt transfers", the recipient is due for the tax on the gift...
https://www.brewin.co.uk/insights/tax-efficient-gi...
https://www.rochelegal.co.uk/resources/help-guides...
A freind of my dad has (or had) about 5 properties (4 BTL plus his main residence). He's transferred the properties into his kids' names. Although he's in his late 70's he is in good health so they will likely be PETs.
Another slight complication - he's probably going to move abroad in the next couple of years. Given that he will have no assets in the UK will anybody actually bother (or will there be a need ) to going through Will or Probate process?
Countdown said:
Another slight complication - he's probably going to move abroad in the next couple of years. Given that he will have no assets in the UK will anybody actually bother (or will there be a need ) to going through Will or Probate process?
Legally, yes. If the transferred properties are still PETs (seven year rule), he will have assets for IHT purposes. There may even be a requirement to prove they aren't PETs if the seven years have passed), but I don't know.On the other hand...
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