Parent buying their kids a home outright

arambol

My father recently read an article that Bernie Ecclestone, the Formula 1 boss, bought his daughter a £45 million home.

Ok, so this is an extreme example but he would like to know what tax implications there are if a parent bought their son/ daughter a flat outright and expected no rent or repayment.

Any insight would be appreciated.

Merry Xmas

Mikeyorks

It's a gift - so no tax implications to the beneficiary. Only a potential one to the donor (estate) if they should die within 7 years.

CLAPTON

well none really
we have no gift taxes in the UK so you can give whatever you like to anyone you like

of course if your estate is liable to IHT (i.e. over 325,000 or 650,000 jointly with spouse ) then any gifts made in the last 7 years before you die may be liable to IHT

arambol

Thanks for clearing that up.

kidmugsy

I wonder whether Ecclestone did buy them houses, or whether he gifted the money into trusts and the trusts bought the houses. Or the trusts lent the youngsters the money, secured on the houses.

ognum

How many people a year do this?

le_loup

ognum wrote: »

How many people a year do this?

Where do you think such records are kept? If you did it, would I know about it?

CKhalvashi

If I did it through my company, the house would be a company asset.

Perhaps the most moneysaving thing to do with this is similar to an HMRC loophole we do with company cars when they hit 2 years old; Sell to my OH for £1,000 each, then after paying 20% vat, sell the cars for their true value.

This is common with many taxi drivers/other driving companies, and although a bit sneaky, it’s perfectly legal.

C

CLAPTON

CKhalvashi wrote: »

If I did it through my company, the house would be a company asset.

Perhaps the most moneysaving thing to do with this is similar to an HMRC loophole we do with company cars when they hit 2 years old; Sell to my OH for £1,000 each, then after paying 20% vat, sell the cars for their true value.

This is common with many taxi drivers/other driving companies, and although a bit sneaky, it’s perfectly legal.

C

are you sure that this works with houses?

cte1111

If he could afford to buy it out of his disposal income, without any drop in his lifestyle, then it is unlikely to fall under inheritance tax rules, even if he did die shortly after. Surprising but true. Usually applied for things like school fees for grandchildren but in Bernie's case, likely to apply to him too owing to his wealth.

jimmo

CKhalvashi wrote: »

Perhaps the most moneysaving thing to do with this is similar to an HMRC loophole we do with company cars when they hit 2 years old; Sell to my OH for £1,000 each, then after paying 20% vat, sell the cars for their true value.

This is common with many taxi drivers/other driving companies, and although a bit sneaky, it’s perfectly legal.

C

I do hope your opinion is based on something you have learned down the pub rather than the professional opinion of your accountant.
You refer to “my company”.
Assuming you are a director of a limited company, if that limited company sells a car to your wife for less than the true market value then either your wife, if she is also a director, or you (if she is not) are chargeable to tax on the benefit (sale at undervalue) your employer has provided.
http://www.hmrc.gov.uk/manuals/eimanual/EIM20504.htm
http://www.hmrc.gov.uk/manuals/eimanual/EIM21655.htm
A self-employed person, as opposed to a company director, may get away with selling a bit of “plant or machinery” to his wife at undervalue but a company director won’t.
Even then there is anti avoidance legislation within the Capital Allowances regime. However, there are all sorts conditions depending on whether the car concerned was purchased by the business before or after April 2009.
http://www.hmrc.gov.uk/manuals/camanual/CA23527.htm
http://www.hmrc.gov.uk/manuals/camanual/CA23560.htm
Too many variables on this thread for a definitive answer but if anybody is breaking the anti-avoidance rules they are in serious danger of being suspected of tax evasion if HMRC catch up with them.