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  • FIRST POST
    • zak3737
    • By zak3737 7th Dec 17, 3:52 PM
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    zak3737
    Can my Mother pay off our outstanding ?
    • #1
    • 7th Dec 17, 3:52 PM
    Can my Mother pay off our outstanding ? 7th Dec 17 at 3:52 PM
    Hi all,
    Grateful for any advice anyone can impart please......
    I'm 55, and currently have a £76 Mortg, with about 9yrs left, unfortunately ! Started to OP by £100/mth.....
    However, my Mum has discussed with me perhaps paying off the outstanding amount, so that we can start really planning & saving for the kids weddings and House purchases etc, rather than paying Banks interest ongoing !
    She has £100k currently sat in Premium Bonds, which altho she gets regular £25-100/mth from, is largely unworking for her.
    Its her only 'investment' as such, although she does have Rental Income of circa £26k/year from 2 Commercial properties, as well as a Private Pension of £800/mth, so she's fine for Income.

    My Father passed away in 2015, and left those Commercial Properties, (£250/300k) and indeed his half of their Home, (Value circa £350/400k), in Trust for me, but as my mother as the beneficiary for the rest of her life. So, in effect, £500k Property is sat in Trust for me.

    Of course, IF she did pay off the £76 Mortg for me, I've said I would happily pay her more per Month than she is currently getting from P.Bonds, so win win.

    However, does anyone know specifically what the implications are financially for me or indeed her, if we go ahead ? Can the amount be deemed as an advance/loan on assets if it needed to be for any Tax situation ? If indeed there is any ?

    Many thanks in anticipation.
    Last edited by zak3737; 07-12-2017 at 3:58 PM. Reason: clarification
Page 1
    • tootallulah
    • By tootallulah 8th Dec 17, 5:34 PM
    • 1,999 Posts
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    tootallulah
    • #2
    • 8th Dec 17, 5:34 PM
    • #2
    • 8th Dec 17, 5:34 PM
    You could treat it as if it was a loan, what you pay is towards 'paying it off'.
    Mortgage House £108,000 September 29th 2017.
    • zak3737
    • By zak3737 8th Dec 17, 9:36 PM
    • 4 Posts
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    zak3737
    • #3
    • 8th Dec 17, 9:36 PM
    • #3
    • 8th Dec 17, 9:36 PM
    We could, but what would the law or HMRC see it as ?!
    • getmore4less
    • By getmore4less 9th Dec 17, 8:39 AM
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    getmore4less
    • #4
    • 9th Dec 17, 8:39 AM
    • #4
    • 9th Dec 17, 8:39 AM
    She has £100k currently sat in Premium Bonds
    HOW

    The max holding is £50kpp.

    My Father passed away in 2015
    If the other £50k were your fathers the holding of the deceased can only be held for 12 months from DOD.

    Any prices after that will need to be repaid.
    • getmore4less
    • By getmore4less 9th Dec 17, 9:07 AM
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    getmore4less
    • #5
    • 9th Dec 17, 9:07 AM
    • #5
    • 9th Dec 17, 9:07 AM
    .....
    She has £100k currently sat in Premium Bonds
    ........
    Commercial Properties, (£250/300k) and indeed his half of their Home, (Value circa £350/400k)
    ......
    If everything went to mum then there is upto £1m nil rate band
    there is £800k there and with property prices it will be worth keeping an eye on them and considering some IHT planning.

    Since you will inherit and have a house etc. then you need multi generational IHT planning to avoid potentially big tax bills.

    ....
    Currently have a £76 Mortg, with about 9yrs left, unfortunately ! Started to OP by £100/mth.....
    However, my Mum has discussed with me perhaps paying off the outstanding amount
    .....
    Of course, IF she did pay off the £76 Mortg for me, I've said I would happily pay her more per Month than she is currently getting from P.Bonds, so win win
    .......
    However, does anyone know specifically what the implications are financially for me or indeed her, if we go ahead ? Can the amount be deemed as an advance/loan on assets if it needed to be for any Tax situation ?

    If she gifts it to you with no strings then it becomes a PET.
    If she lives for 7 years it drops off her estate.

    If she loans you the money and you pay it back(no interest) then there is no tax implications other than the debt remains part of her estate.

    You could split part gift/part loan
    £100pm for 20 years is £24k say that was the loan and the other £50k was a gift.

    There is no gift tax and no tax on loans if no interest is paid.

    if your LTV is decent then the interest rate should be very good the money may be better directed to making the grandkids deposits bigger as that will save a lot more money going forward if they are getting close to house buying.

    The rates on mortgages get a lot better as the LTV drops I looked at nationwide a few days ago for another thread so as an example
    With Nationwide(2y fix no fee rates),
    95% 4.04%
    90% 2.39%
    85% 1.89%
    80% 1.84%
    75% 1.75%
    70% 1.74%
    65% 1.74%
    • zak3737
    • By zak3737 9th Dec 17, 1:17 PM
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    zak3737
    • #6
    • 9th Dec 17, 1:17 PM
    • #6
    • 9th Dec 17, 1:17 PM
    Thx Getmore.....
    She has £50k PB in her name, and £50 in AN Others.......

    Whats a PET pls ? Partially Exempt Transfer ?

    If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
    It would leave her some left over, as she has some other funds available too, as well as her income.

    In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......
    • getmore4less
    • By getmore4less 9th Dec 17, 2:27 PM
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    getmore4less
    • #7
    • 9th Dec 17, 2:27 PM
    • #7
    • 9th Dec 17, 2:27 PM
    Your mum needs to check the rules on premium bonds.

    You can't use other people to hold bonds for you.
    • zak3737
    • By zak3737 11th Dec 17, 11:08 AM
    • 4 Posts
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    zak3737
    • #8
    • 11th Dec 17, 11:08 AM
    • #8
    • 11th Dec 17, 11:08 AM
    Point taken, I'll remind her.

    Whats a PET pls ? Partially Exempt Transfer ?

    If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
    It would leave her some left over, as she has some other funds available too, as well as her income.

    In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......
    • getmore4less
    • By getmore4less 11th Dec 17, 11:19 AM
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    getmore4less
    • #9
    • 11th Dec 17, 11:19 AM
    • #9
    • 11th Dec 17, 11:19 AM
    Point taken, I'll remind her.

    Whats a PET pls ? Partially Exempt Transfer ?

    yes

    If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
    It would leave her some left over, as she has some other funds available too, as well as her income.

    one risk that comes up a lot is deprivation, with the assets and income probably not an issue to be too concerned about.

    In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......
    Originally posted by zak3737
    Not sure what you are getting at or trying to achieve.

    She can gift you the money or loan you the money.

    If this trust money is a life interest for her and she downsizes then gives it out I think that is a PET on her estate anyway so just delays the start of the 7 years.
    • VDOT47
    • By VDOT47 11th Dec 17, 11:20 AM
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    VDOT47
    PET = Potentially Exempt Transfer for IHT purposes. As advised above, any gifts will then fall outside her estate for IHT purposes if she survives 7 years after the date of gift. If she dies sooner, than there is a sliding scale for how much will be exempt from the estate for IHT purposes.
    • getmore4less
    • By getmore4less 11th Dec 17, 11:22 AM
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    getmore4less
    PET = Potentially Exempt Transfer for IHT purposes. As advised above, any gifts will then fall outside her estate for IHT purposes if she survives 7 years after the date of gift. If she dies sooner, than there is a sliding scale for how much will be exempt from the estate for IHT purposes.
    Originally posted by VDOT47
    ONLY if the gift is over the nil rate band so a minimum of £325k.
    • VDOT47
    • By VDOT47 11th Dec 17, 11:36 AM
    • 42 Posts
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    VDOT47
    Indeed.


    Best advice is for her to speak to a tax planning expert (accoutant, solicitor or financial advisor) so that she knows exactly what the effects might be of each of the options suggested by the OP.
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