HMRC Tax Liability

Yorkie1

Decker16 said:

Thank you all very informative.

It is a gift to purchase home without mortgage and I don't want an interest in it.  All I may ask is that since I provided all the money for the purchase that it returns to me upon their death hopefully a few decades away.

You will need to be careful about whether this is feasible. Probably the only way to manage this would be to put a charge on the land registry, so that when the house is sold you are repaid before other claims on the property. You couldn't stipulate what goes in a will as that may be changed, for example. Don't rely on your friend's word alone, as that is an easy way for things to go wrong despite the best of intentions.

_Penny_Dreadful

Decker16 said:

Thank you all very informative.

It is a gift to purchase home without mortgage and I don't want an interest in it.  All I may ask is that since I provided all the money for the purchase that it returns to me upon their death hopefully a few decades away.

That’s not a gift, that’s a loan. 

_Penny_Dreadful

Decker16 said:

This is the internet reference 

Yes, gifting money for a house purchase to a friend can trigger Capital Gains Tax (CGT) for you in the UK if the money comes from selling an asset that has increased in value (like a property or shares), as hmrc treats a gift as if you sold the asset for its market value, though you won't pay CGT if you gift cash directly from savings or if the asset is your main home (due to private residential relief), but you must report it and use your annual cgt allowance

When You Might Owe CGT:

• Gifting an Asset (like Property/Shares): If you give away a property or shares that have grown in value, HMRC deems you've sold it at market value. You pay CGT on the profit above your annual exemption (£3,000 for 2024/25).
• Not Your Main Home: If the gifted property wasn't your main residence, you might owe CGT on the gain. 

When You Likely Won't Owe CGT:

• Cash Gifts from Savings: Gifting cash directly from your bank account (not from selling an asset) usually doesn't trigger CGT, as cash is not a chargeable asset.
• Private residential relief (PRR): If the gifted asset was your main home, PRR can exempt all or part of the gain.
• Spouse/Civil Partner: Gifts to a spouse or civil partner are exempt from CGT. 

Key Steps & Considerations:

1. Identify the Source: Determine if the money comes from selling an asset with a gain or from general savings.
2. Market valueIf gifting an asset, its market value at the time of gift is used for CGT calculation.
3. Annual Exemption: Use your annual CGT allowance (£3,000 for 2024/25).
4. Report: If you owe CGT, you must file a CGT(often within 60 days). 

In Summary: Gifting money is generally fine, but if that money came from selling an appreciated asset like a house or shares, you're making a disposal and could owe CGT on the profit, so check the source of funds carefully. 

I'm okay as I've know them for over a decade.

The point is I'm not selling but remortgage to release equity so not sure if above applies thank you

You’re not disposing of all or part of an asset therefore CGT doesn’t apply. Even if you were selling your home ie your only or main residence to gift/lend your friend money CGT still wouldn’t apply as you get Principle Residence Relief on your only or main residence. 

Albermarle

_Penny_Dreadful said:

Decker16 said:

Thank you all very informative.

It is a gift to purchase home without mortgage and I don't want an interest in it.  All I may ask is that since I provided all the money for the purchase that it returns to me upon their death hopefully a few decades away.

That’s not a gift, that’s a loan. 

Only if in some way the friend in question was obliged to pay it back, via  a charge on the house for example.
If the OPs friend just says that they will put this in a will, but only on trust and they could change their mind at a later date, then it is still a gift, as effectively they can do what they want with it.

_Penny_Dreadful

Albermarle said:

_Penny_Dreadful said:

Decker16 said:

Thank you all very informative.

It is a gift to purchase home without mortgage and I don't want an interest in it.  All I may ask is that since I provided all the money for the purchase that it returns to me upon their death hopefully a few decades away.

That’s not a gift, that’s a loan. 

Only if in some way the friend in question was obliged to pay it back, via  a charge on the house for example.
If the OPs friend just says that they will put this in a will, but only on trust and they could change their mind at a later date, then it is still a gift, as effectively they can do what they want with it.

It doesn’t matter if the loan is secured with a charge registered against the title or not. The OP is giving the money with the expectation that it will be repaid at some point in the future, that is not a gift it is a loan. 

horsewithnoname

Capital Gains Tax is chargeable on a GAIN. You haven’t made a gain. 

If this is a genuine gift, then you will need independent legal advice and the solicitor will basically say that you aren’t being coerced or anything. If it’s a loan, then that isn’t a gift. 

I think you need to decide what it is you are doing, and ask a question about that. 

horsewithnoname

In that case the OP needs to get a proper legal charge on the property. And not misdescribe it as a gift. 

saajan_12

Decker16 said:

This is the internet reference 

Yes, gifting money for a house purchase to a friend can trigger Capital Gains Tax (CGT) for you in the UK if the money comes from selling an asset that has increased in value (like a property or shares), as hmrc treats a gift as if you sold the asset for its market value, though you won't pay CGT if you gift cash directly from savings or if the asset is your main home (due to private residential relief), but you must report it and use your annual cgt allowance

When You Might Owe CGT:

• Gifting an Asset (like Property/Shares): If you give away a property or shares that have grown in value, HMRC deems you've sold it at market value. You pay CGT on the profit above your annual exemption (£3,000 for 2024/25).
• Not Your Main Home: If the gifted property wasn't your main residence, you might owe CGT on the gain. 

When You Likely Won't Owe CGT:

• Cash Gifts from Savings: Gifting cash directly from your bank account (not from selling an asset) usually doesn't trigger CGT, as cash is not a chargeable asset.
• Private residential relief (PRR): If the gifted asset was your main home, PRR can exempt all or part of the gain.
• Spouse/Civil Partner: Gifts to a spouse or civil partner are exempt from CGT. 

Key Steps & Considerations:

1. Identify the Source: Determine if the money comes from selling an asset with a gain or from general savings.
2. Market valueIf gifting an asset, its market value at the time of gift is used for CGT calculation.
3. Annual Exemption: Use your annual CGT allowance (£3,000 for 2024/25).
4. Report: If you owe CGT, you must file a CGT(often within 60 days). 

In Summary: Gifting money is generally fine, but if that money came from selling an appreciated asset like a house or shares, you're making a disposal and could owe CGT on the profit, so check the source of funds carefully. 

I'm okay as I've know them for over a decade.

The point is I'm not selling but remortgage to release equity so not sure if above applies thank you

Okay so that's talking about CGT on the assets you are giving to the friend. eg if you already owned a house, stocks & shares, etc which gained in value before you gifted them over, there could be CGT due. As you're giving cash, there's no CGT there. 

saajan_12

Decker16 said:

Thank you all very informative.

It is a gift to purchase home without mortgage and I don't want an interest in it.  All I may ask is that since I provided all the money for the purchase that it returns to me upon their death hopefully a few decades away.

How would you make sure it returns to you? If its in friend's will, they could easily change that and there's nothing you could do.