Worried

Georgia_3

Hi, first post-feeling worried and a bit stupid that I never thought of this before

My ex and I split up 3 years ago after 10 years, the house we bought together was in his name as we'd planned to buy another property together and rent out. When we split, as I was classed as common-law wife and did not have the relevant paperwork, I could not claim half the house. (Yes, have learnt my lesson). He made me an offer of £20,000, (house was valued at £145,000)which I accepted and it basically enabled me to pay off debts and buy furniture for my rental property as I left with very little.

I have been browsing various tax boards today re ebay tax and came across various posts re. gifts of £x being paid and tax implications. Should I have declared this £20,000 to the Inland Revenue at the time and paid tax on it? I feel like such an idiot and am worrying myself stupid because there's no way I can afford a hefty tax bill

Thanks to anyone that can help

windym_2

Georgia, I'm afraid I don't know the answer but have replied to say 'welcome to MSE' :j and you have crossed the first hurdle. There are lots of MSErs on here who will help you find the answer. Good luck. :beer:

Bossyboots

A gift only becomes an issue for tax if the person giving the gift dies within seven years when it would still be considered part of their estate for tax purposes. You don't have to worry about it now therefore and not at all if your ex is still alive in four years time.

It is explained here http://www.hmrc.gov.uk/cto/customerguide/page6.htm

Georgia_3

Hi both
Thank you for the nice welcome and the info- its been really helpful. :beer:

and after lurking for over a year, it's nice to finally come on board!

jellycat40

Cor I am glad as I am going to be in a similar situation myself. It hadn't occurred to me either. It is going to be bad enough having to hand over some of it to the OR.

Louise

Mikeyorks

Georgia wrote:

Should I have declared this £20,000 to the Inland Revenue at the time and paid tax on it?

No. He bought out your share of your main residence. It wasn't a gift, it was your 'negotiated' entitlement ... it happens daily, unfortunately .... and it's not taxable.

If your ex had to sell the house to 'pay you off' (dreadful expression - sorry) -you would have gone your separate ways with £125k and £20k respectively - and tax wouldn't have come into it (assuming main residence). The fact he re-mortgaged, or whatever, to raise the £20k and buy out your share .. doesn't change that.

Pennywise

Mikeyorks wrote:

No. He bought out your share of your main residence. It wasn't a gift, it was your 'negotiated' entitlement ... it happens daily, unfortunately .... and it's not taxable.

If your ex had to sell the house to 'pay you off' (dreadful expression - sorry) -you would have gone your separate ways with £125k and £20k respectively - and tax wouldn't have come into it (assuming main residence). The fact he re-mortgaged, or whatever, to raise the £20k and buy out your share .. doesn't change that.

This would only be true if the OP was a joint owner of the property which she stated she wasn't. The house was bought in the ex's name, so only the ex would benefit from the principal private residence relief. In this case, the money paid to the OP really was just a gift!

Georgia_3

Thanks all

Mikeyorks

Pennywise wrote:

This would only be true if the OP was a joint owner of the property

The OP appears to have signed off as content. So I won't labour this, but you don't have to be a joint owner to attain relief. But you may have to demonstrate an equity ('the house we bought together') - which (as in this case?) can be agreed between the parties.