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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3819
Experience:  FCCA FCMA CGMA ACIS
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Lawyer,My current situation is as follows:My

Customer Question

Lawyer,
My current situation is as follows:
My father has planned to purchase a property (under his own name) but under Trust . In addition, he is also planning on inserting a provision into the Trust Deed stipulating that the legal ownership of the property will be transferred to myself in 4 years' time. I had 2 questions that I wanted to clarify with regards ***** ***** process:
1) Are there any inheritance tax advantages (or disadvantages) by having him purchase the property via this method (and transferring it to me later on)?
2) In 4 years' time (once the legal ownership of the property would be transferred to myself), would I be liable to pay Stamp Duty tax?
Many thanks.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
, I'm Keith and happy to help you with your question.
Providing he lives years after the gift there are no IT implications pair of you. Death between the 7 tears could create a liability by mean\s of the gift being added back to his estate, but this add back is on a taper. If his estate on death cannot meet the Inheritance Tax liability it cascades down to the beneficiary payment.
Stamp Duty would be payable on the transfer deed. It is at the following rates:
' Residential properties
You’ll pay:
nothing on the first £125,000 of the property price
2% on the next £125,000
5% on the next £675,000
10% on the next £575,000
12% on the rest (above £1.5 million)'
[Gov UK information site]
I do hope I have been able to throw some light on your question.
Customer: replied 2 years ago.
Dear *****,
One question I would like to clarify please: if a property is purchased in a trust , would stamp duty need to be paid twice (ie at initial purchase stage AND at transfer stage)?"
Many thanks.
Expert:  bigduckontax replied 2 years ago.
Regrettably this may be the case as the move from trust status to you might well be deemed a disposal thus attracting SDLT. I would be inclined to inquire of the solicitor who arranges the conveyance on the matter. However, I don't have much doubt that the Duty is applicable. Here is an extract from HMRC Advice Note SDLTM31710a:
'If a bare trustee or nominee acquires property on behalf of the beneficiary that will be treated as an acquisition by the beneficiary, the beneficiary being the person liable duty land tax and responsible the land transaction return to HM Revenue & Customs.'
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Expert:  bigduckontax replied 2 years ago.
Thank you support.

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