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bigduckontax
bigduckontax, Accountant
Category: Tax
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I understand that cash can be provided as gifts between family

Resolved Question:

I understand that cash can be provided as gifts between family (or regardless) without having to pay income tax.
Is it possible to gift property or transact between family without money and not having to pay the capital gain tax nor the stamp duty?
Thanks
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

The answer to your question is as long as the proverbial piece of string. Gifts, cash or otherwise, carry no liabilities to Income Tax (IT) for either the donor or the recipient. It is possible to gift landed property without money. Stamp duty only applies to transfers of land with a value over 125K. I will go into that more fully in a moment.

Gifts, however, do impinge on Capital Gains Tax (CGT). Any substantial gift made over creates a Potentially Exempt Transfer (PET) in the donor's estate. This tapers off over seven years. In the event of the donor's demise within the PET time limit the value of the gift is added back to the estate for Inheritance Tax (IT) purposes and PETs are the first to suffer IT and if the donor's estate is unable to meet the IT then it cascades to the recipient of the gift for immediate payment. The solution is, of course, a decreasing term whole life insurance to protect against a PET.

Stamp Duty is one of the oldest UK taxes having been around since the days of Good Queen Bess. Stamp duty was the cause of the Boston Tea Party and the subsequent American War of Independence although though in fact tea was the only item upon which a direct tax was imposed in New England. For gifts it ranges from 1 to 8% on the market value of the land transferred to relatives, 5 - 11% for others.
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