council tax exemption after death

brekfast

What is the intention of providing a council tax exemption following the death of the occupant who paid the tax?
The question is relevant to the following situation.
House owned by mother and daughter as tenants in common with 50% share each. Only mother lives there and pays council tax as single occupant. Mother dies so until probate is obtained that half of the property is in mother's estate and responsibility of the executor of her will (who,in this case, also owns the other half of the property - which point is I think muddying the waters. But there is a distinction between daughter as owner of 50% share in her own right and daughter as personal representative of 50% share previously owned b her mother.)
Is the exemption intended to remove the dwelling entirely from council tax whilst the affairs of the deceased taxpayer are dealt with?

molerat

Why another thread, reasonable answers have been given in the other one. The situation has been muddied by the previous sole occupier not being sole owner. https://forums.moneysavingexpert.com/discussion/4784419
Perhaps CIS will comment.

Who is liable?

The hierarchy of liability


To establish who the person is who is liable for the payment of Council Tax, there is a set 'hierarchy'.
This hierarchy is set down below; look down the list and as soon as you reach a description that applies to a person in your home, they will be the person liable for the Council Tax.

• A resident freeholder (so for owner-occupied property the owner is liable)
• A resident leaseholder (this includes assured tenants under the housing act 1988)
• A resident statutory or secure tenant
• A resident licensee
• A resident
• The owner (this applies where the dwelling has no residents)

http://www.wandsworth.gov.uk/info/200267/about_council_tax/16/who_is_liable

CIS

This tribunal decision will answer the question - http://info.valuation-tribunals.gov.uk/decision_document.asp?appeal=/decision_documents/documents/CT_England/5180M121693084C.htm&Decision=liability . Point 16 & 17.

The exemption is only meant to cover a property where all the owner(s) is/are deceased - if there's more than one owner the surviving one takes over responsibility for council tax (irrespective of any issues re the will/probate etc).

brekfast

The exemption is only meant to cover a property where all the owner(s) is/are deceased - if there's more than one owner the surviving one takes over responsibility for council tax (irrespective of any issues re the will/probate etc).

The tribunal decision is confusing with regard to what the intention of the exemption is.

You can have two identical scenarios of a mother and son where son lives and pays his own council tax elsewhere and the mother lives and pays her own council tax in a house she is leaving to her son.

If the son does not own a part share in his mother’s abode then he is exempt from additional council tax for a period after his mother’s death (could be anything from 6 months to 18 months depending on circumstances). Son pays only his own council tax.

If a son owns a part share in his mother’s abode then he is immediately liable for double council tax after his mother’s death. (could be anything from an additional £750 - £2,250 depending on circumstances). Son pays double council tax for what could easily be a year.

If the exemption is intended to exempt the mother’s estate whilst her affairs are dealt with then the exemption should always apply to the entire council tax for a period.

If there is a penalty for being a part owner then it ought to be linked to the share of the house owned at point of death. Although it seems unfair to penalise a child who shoulders some of the responsibility an elderly parent feels of owning a house.

booksurr

brekfast wrote: »

If there is a penalty for being a part owner then it ought to be linked to the share of the house owned at point of death. Although it seems unfair to penalise a child who shoulders some of the responsibility an elderly parent feels of owning a house.

why?
if the child owns a property they do not live in then it is only right and proper that they pay the council tax on it

the only reason an "elderly" parent would make their child a part owner whilst still alive is in an attempt to avoid tax therefore again why is it unfair that after death their attempt unravels?

CIS

If the son does not own a part share in his mother’s abode then he is exempt from additional council tax for a period after his mother’s death (could be anything from 6 months to 18 months depending on circumstances). Son pays only his own council tax.

The estate would be exempt until it was settled and the property was disposed of (up to 6 months after probate). Once the property is disposed of then the new owner becomes liable.

If a son owns a part share in his mother’s abode then he is immediately liable for double council tax after his mother’s death. (could be anything from an additional £750 - £2,250 depending on circumstances). Son pays double council tax for what could easily be a year.

A person can be liable for the council tax charge on multiple properties at the same time under council tax legislation (the main time this occurs is for landlords with multiple properties).

If the exemption is intended to exempt the mother’s estate whilst her affairs are dealt with then the exemption should always apply to the entire council tax for a period.

It's intended to cover the estate against cost where they are the sole owner, which is not the case here.

getmore4less

Seems simple to me.

Council tax liability is joint and several for people at the same level of liability.

The way to avoid the tax yourself is get someone of higher priority to take on the liability.

Get some one in occupation so they be come liable, a student in occupation is exempt.

No point in leaving the place empty.

Not clear to me yet on the legal/beneficial owner order of liability but in this case there is clear 100% beneficial ownership of the daughter , and legal ownership currently split, daughter and trustees of the estate.

Either way the joint and several liability would mean the daughter is liable so needs to find some other exemption.

brekfast

Booksurr, avoiding tax is not the only reason an elderly parent would make their child a part owner. I think you’re assuming that the child has bought the house together with parent AND owns a house of their own. BUT
there will also be cases like mine where child doesn’t own property elsewhere and mother gifts part of house as she wanted there to be a sense of security, of having somewhere to go, and also then felt able to share the responsibility of maintenance on the house which she definitely found more of a worry and a burden in her eighties.

booksurr

brekfast wrote: »

Booksurr, avoiding tax is not the only reason an elderly parent would make their child a part owner. I think you’re assuming that the child has bought the house together with parent AND owns a house of their own. BUT
there will also be cases like mine where child doesn’t own property elsewhere and mother gifts part of house as she wanted there to be a sense of security, of having somewhere to go, and also then felt able to share the responsibility of maintenance on the house which she definitely found more of a worry and a burden in her eighties.

fair enough, however this is the cutting tax board so answers are given in the context of tax not in the context of real life issues. the fact you are now an owner and it is your main residence does achieve a good result as it means if mother needs means tested care costs you cannot be forced out of the home as the council can't sell it whilst you are there - they can of course still take a charge against the value of the gift to you however as that could be classed as deprivation of assets so the monetary value of the gift is far from safe, although I agree you have been given "somewhere to go"

for example although you do not own anywhere else and both you and mother live in the property the share that she has gifted to you will remain part of her estate for inheritance tax purposes since she continues to receive a benefit from it - she lives there! Of course if her estate is below the IHT threshold then not a problem, nonetheless a tax issue to be aware of as gifting a property before death is often an area of DIY tax planning that people get wrong

fed_up_and_stressed

brekfast wrote: »

Booksurr, avoiding tax is not the only reason an elderly parent would make their child a part owner. I think you’re assuming that the child has bought the house together with parent AND owns a house of their own. BUT
there will also be cases like mine where child doesn’t own property elsewhere and mother gifts part of house as she wanted there to be a sense of security, of having somewhere to go, and also then felt able to share the responsibility of maintenance on the house which she definitely found more of a worry and a burden in her eighties.

Security ? This would potentially be a liability if the younger person needed to claim income based benefit as they would have a substantial financial asset.

Also sharing "responsibility for maintenance" i fail to see how a child "has" to own a share of the parental home in order to help their parents out with repairs. Don't families just help each other because they are family anymore :eek: