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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I wish to gift some property to my adult children if I die

Resolved Question:

I wish to gift some property to my adult children if I die before 7 years who is responsible for the tax payable i.e my children or my estate ? if the answer is estate will the tax be part of my death tax free allowance (around(###) ###-####many thanks Jack
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

INHERITANCE TAX

If you die within seven years of making a gift, its value will be included in your estate for Inheritance Tax purposes so the liability will initially at least fall on the estate. However, your nil-rate band or the tax free allowance as you refer to it will be used first against gifts you make in the seven years before your death in chronological order. Any balance will be used against assets you own when you die.

Take a look here for information on who pays Inheritance Tax including when beneficiaries are liable and here for information on Inheritance Tax taper relief. Taper relief can apply to gifts made in the seven years before death.

There are reliefs from Inheritance Tax for gifts of business assets which you can read about here.

CAPITAL GAINS TAX

The gift of a property to a connected person (your children are connected persons for this purpose) will also constitute a disposal for Capital Gains Tax purposes. You will be deemed to have "sold" the property for its open market value and so there may be CGT implications for you.

The donor and the recipient of the gift of a business asset may make an election for the gain to be held over until a subsequent disposal by the recipient of the gift. You can read about that in HS295.

I hope this helps but let me know if you have any further questions.
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