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Sam, Accountant
Category: Tax
Satisfied Customers: 14154
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi I am a single parent with a 15 year old daughter living

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I am a single parent with a 15 year old daughter living with me.
My house is currently valued around £600,000 with a £100,000 mortgage.
How can my daughter avoid inheritance tax when I die? I understand that I can give my house to her as long as she is living with me and I pay the rent to her but being 15, I do not think that is possible, is it? The last thing I want is for her to sell the house to pay the tax while she is trying to cope with my death.
I have a health issue so I feel I need to sort it out soon.

Thank you for your help.
Kind regards

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer. I am sorry to hear of your health issues.

I am afraid until she is 18 she cannot legally own property - so this would be something you could not consider at this time but you could seek advise with respect to a trust with a local financial adviser, but like any gifting unless more than 7 years lapse between the date of the gift and your passing, then the asset will still be brought into consideration for inheritance tax I am sorry to say.

And I mention trusts as there is a consideration for a minor

Trusts for bereaved minors

A bereaved minor is a person under 18 who has lost at least 1 parent or step-parent. Where a trust is set up for a bereaved minor, there are no Inheritance Tax charges if:
##the assets in the trust are set aside just for bereaved minor
##they become fully entitled to the assets by the age of 18

A trust for a bereaved young person can also be set up as an 18 to 25 trust - the 10-yearly charges don’t apply. However, the main differences are:
##the beneficiary must become fully entitled to the assets in the trust by the age of 25
##when the beneficiary is aged between 18 and 25, Inheritance Tax exit charges may apply

Which does mean that the exit charges by then may be raised by your daughter to pay anything due - so I would urge you to seek further advise on this. I will advise that there is a UK law section here on Just Answer, and the experts are all practising law, so you would get some solid advise on what sort of trust and how it operates, and more importantly the charges that arise, and how they affect the Inheritance tax position.



Inheritance tax is considered on any amount over £325,000 - as this is the NIL rate band, and any part of the estate over and above this amount is then subject to 40% tax.

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