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Avoiding CGT and inheritance tax

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  • G_M
    G_M Posts: 51,977 Forumite
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    steampowered wrote: »

    In your example, in exchange for the property he is selling, your father would receive £600k in cash plus a new property worth £400k. I suspect that the total value for CGT purposes would still be £1 million even though only part of it is being paid in cash. I don't think you are actually saving CGT.
    I suspect the intention is to 'hide' the £400K new property from HMRC when making the CGT declaration.
  • steampowered
    steampowered Posts: 6,176 Forumite
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    edited 7 December 2017 at 10:36AM
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    00ec25 wrote: »
    it will be essential for you to get professionally qualified tax advice is the technically sound content of the above advice

    The point I was making is that the value of an asset for the purposes of calculating the disposal value is not simply the cash value ascribed to the property purchase agreement. I didn't feel the need to point out that CGT is charged on gains (though that is of course true).

    The sale to the neighbour envisaged by the Op is not a connected party transaction. A next door neighbour is not a category of connected person for the purposes of s286 of The Taxation of Chargeable Gains Act 1992.

    I agree on the need for the Op to take professional advice.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    The trust status need sorting first.
  • MB1972
    MB1972 Posts: 4 Newbie
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    Thanks for all the advice and suggestions, it has certainly helped clarify a few things.

    We had already decided to take advice before the posting so that was never an issue.

    It looks like possibly dissolving the trust and using PET will be the wAy to go. We may retain a plot of land in the sale and then fund the cost of the new property from the proceeds to avoid stamp duty The actual value is 1.5 million so well above IHT even in 2020.

    I will post back once we have had advice in a few weeks.
  • getmore4less
    getmore4less Posts: 46,882 Forumite
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    £1.5m needs some serious IHT planning, quite surprised this has not been done already as it is needed when, as a couple, you approach £650k.
  • Chappers27
    Chappers27 Posts: 97 Forumite
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    Just don't do it. It sounds messy and complicated, which means the result will be messy and complicated. If you have to 'come up' with a solution, there's always a problem.
    no signature
  • Mgman1965
    Mgman1965 Posts: 249 Forumite
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    Sounds like another of those "can I give my elderly mother the money to buy her heavily discounted LA house for cash, who then sells/rents it to me for a £1".
  • theartfullodger
    theartfullodger Posts: 14,601 Forumite
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    Paying taxes is the "greatest form of patriotism"
  • Gabbs_the_Newt
    Gabbs_the_Newt Posts: 154 Forumite
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    theartfullodger wrote: »
    Paying taxes is the "greatest form of patriotism"
    So no ISAs, or pensions for you then? I simply don't believe you.
  • ViolaLass
    ViolaLass Posts: 5,764 Forumite
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    If I wanted to wiggle out of tax in a way that might not be legal, I'm not sure I would run it by a public forum first.
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