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bigduckontax, Accountant
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I would like transfer 1 of my companys to my son who lives

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I would like transfer 1 of my companys to my son who lives in uk I live in isle of man,property co valued at 1.5 million what tax is involved if I gift it to him

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

None whatsoever as the UK has no Gifts Tax regime. However, a gift creates a Potentially Exempt Transfer (PET) in your estate for UK Inheritance Tax (IHT) purposes. PETs run off over seven years at a taper and in the event of your demise within that time period are added back to your eatate and are the first to suffer IHT. If your estate is insufficient to meet the tax than it cascades down to the beneficiary for immediate payment. The classic defence against a PET is a reducing Tern Life Insurance Policy, but, of course, dependingon your age premiums may be prohibitive.

Unlike any other tax, IHT follows you around the world, irrespective of where you reside. It is based on your domicile, not residence. You need to change your domicile in order to shrug off IHT and that takes at least 16 years of residence outside the UK before you can even begin the process. If fact it is probably easier to survive the seven years than it is to change your domicile!

If you have always lived in the IOM then you are probably in the clear for UK IHT as the IOM has no Inheritance Tax at all. Just thank your lucky stars you do not live in France where gifts tax kicks in at 5K Euros!

I do hope that my answer has been of assistance.

Customer: replied 2 years ago.

would it be better keep as isle man co even though he stays in Scotland ,would there be stamp duty or any other taxes to think about and if so how much on a 1.5 million property,

It really does not matter where the company is kept. It is the gift of the company to your son which creates the PET if you are subject to UK IHT. That depends on your domicile as I explained. If you have always been IOM resident it would not be created anyway as the IOM has no IHT regime.

Purchasing a property in Scotland would attract Land and Buildings Transaction Tax [LBTT] (from 1 April 2015 under recently devolved powers). For a 1.5 million land transaction this would be:

Up to £135,000


£135,001 - £250,000


£250,001 - £1,000,000


Over £1,000,000


GBP 137,300 [115K @ 2%, 750K @ 10% and 500K @ 12%].

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Thank you for your excellent support.

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