Transferring car ownership. Gift tax?

hoofy

My mum has decided she no longer wants to drive as she is now too old, so, she says I can have her car. I'm a named driver on the car insurance and I don't own a car of my own as my mum lives two doors down from me so I've had the use of the car pretty much whenever I've wanted to use it. Online valuations put the car at around 5k so some tax would be due if she were to gift the car to me.

Should I.

Transfer the car through DVLA and declare the gift next time I see my accountant.

Transfer the car and say nothing.

Leave the car in my mums name and carry on with me paying for the tax and insurance.



Of course, I am now tasked with driving my mother to see her friends etc so she is getting some use out of the car as a passenger.

[Deleted User]

Why would tax be due on it? There's nothing to stop her simply giving you the car - or indeed, money.

Does she expect to pass away within the next seven years? That would be the only reason why there may be some tax, but that comes out of her estate.

MX5huggy

There is no “gift tax”. Your mum can give you the car neither of you will have any tax to pay. You don’t need to mention it to your accountant. 

Theoretically there maybe inheritance tax liability but only if she dies within 7 years and if this is all she is giving you in a 2 year period then it’s covered by the gift allowance anyway.

The other thing to note is the the DVLA don’t record the owner, just the registered keeper. So if you need proof of ownership beyond a verbal agreement between you and your mum you should create a written document showing that you are the owner. Say for example, if you have a brother who may dispute your ownership of the car later. 

General_Grant

hoofy said:

My mum has decided she no longer wants to drive as she is now too old, so, she says I can have her car. I'm a named driver on the car insurance and I don't own a car of my own as my mum lives two doors down from me so I've had the use of the car pretty much whenever I've wanted to use it. Online valuations put the car at around 5k so some tax would be due if she were to gift the car to me.

Should I.

Transfer the car through DVLA and declare the gift next time I see my accountant.

Transfer the car and say nothing.

Leave the car in my mums name and carry on with me paying for the tax and insurance.



Of course, I am now tasked with driving my mother to see her friends etc so she is getting some use out of the car as a passenger.

As you mention the DVLA you are presumably living in the UK and, provided you are not a citizen of another state (who may have different rules), there is no Gift Tax.  Your accountant might charge you for telling you that.

Personally, I would leave the car with your mother as the owner until it comes to the time to consider insurance renewal.  Then find the best thing for you as main driver.  However if your mother is shown as the main driver now and doesn't drive it, you may find it advisable to change that.  Perhaps you should ask on an insurance related board.

hoofy

The insurance already has me as the main driver as this was the cheapest way.

jimjames

hoofy said:

Online valuations put the car at around 5k so some tax would be due if she were to gift the car to me.

What tax do you think is due?

You could leave it exactly as it is if you are already main driver, she covers insurance costs in return for getting lifts.

hoofy

jimjames said:

hoofy said:

Online valuations put the car at around 5k so some tax would be due if she were to gift the car to me.

What tax do you think is due?

I thought gift tax was due if the value of the gift was over 3.5K, seems I'm mistaken.

I could leave the log book in my mums name and then just carry on as though the car were mine, but I thought for the sake of neat and tidiness, just do the transfer online, 10 minutes of a job. 

jimjames

hoofy said:

jimjames said:

hoofy said:

Online valuations put the car at around 5k so some tax would be due if she were to gift the car to me.

What tax do you think is due?

I thought gift tax was due if the value of the gift was over 3.5K, seems I'm mistaken.

I could leave the log book in my mums name and then just carry on as though the car were mine, but I thought for the sake of neat and tidiness, just do the transfer online, 10 minutes of a job. 

There isn't a gift tax in the UK. Remember that change of keeper will cancel the tax so you'll need to re-tax it which will mean you're paying twice for the same month. You'll also add another keeper to the log book and need to update insurance which is more complicated if the owner and policyholder aren't the same. 

hoofy

As far as insurance goes, it is my policy with me as main driver and my mum as named driver. The log book is in my mums name and the vehicle is kept on her drive, which is actually my other house but she lives there.

One problem I can foresee is next time I try to insure, the question about where the car is parked overnight, the answer would be it is on a drive but it wouldn't be the drive of the address of the new registered keeper, me.

I suppose I could register the car in my name at my mums address, which is really my other address, I'm the technically the landlord.

HCIMbtw

hoofy said:

The insurance already has me as the main driver as this was the cheapest way.

If you weren't the main driver... and your mother was, then this can qualify as fronting (insurance fraud) and shouldn't be done because it can invalidate your policy. 

But anyway lets ignore that now, because you are the main driver on the policy the only thing I'd make sure of is that the address the car is registered to, e.g. where it is staying over night is yours and not your mums (if they are different)... so that if you do have to make a claim, because somebody smashes into the car, or nicks it or some part of it, you are covered by your policy (might need to pay an insurance admin fee at a different insurance rate (higher or lower) based on the change of the address). 

Your mum can transfer registration of the car to you, formally giving it to you (in the eyes of the road tax man) online - https://www.gov.uk/sold-bought-vehicle

I did it recently giving a car to my sister 

No tax liability for your accountant.. just if you do the DVLA transfer your mum will get her road tax payment back and you have to set up to pay the road tax.

I'd do the above, keeps everything above board.

GrumpyDil

As above. I'd complete a transfer but would do it on the last day if the month so you wouldn't end up paying two lots of car tax for a month.