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bigduckontax, Accountant
Category: Tax
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My wife and me want to use help to buy buy she owns

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My wife and me want to use help to buy buy she owns property in another country long time before she came to the UK. She would like to give it as a gift to her mother.
Are there any tax implications in the UK? her mother will need to pay 2.5% tax in Serbia.
Milan Milas
Customer: replied 2 years ago.
Her mother leaves in Serbia
Hello Milan, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The UK has no Gifts Tax regime so there is no tax payable on such a gift. Thank her lucky stars she doesn't live in France where gifts tax kicks in at 5K Euros! Having said that the gift will count as a disposal for Capital Gains Tax (CGT) purposes and be liable to that tax on any gain made, less her Annual Exempt Amount (AEA) of 11.1K, at 18% or 28% or a combination of the two rates depending on her income including the gain in the tax year of sale. If the property is your wife's sole or main domestic residence then Private Residence Relief (PRR) may apply which is at 100%. Furthermore this gift will create a Potentially Exempt Transfer (PET) in her Inheritance Tax (IHT) affairs. PETs run off at a taper over seven years and in the event of her demise within that period the PET will be added back to her estate for IHT purposes and will be the first to suffer the tax. In the event of her estate being insufficient to meet this tax then it cascades down to the beneficiary for immediate payment. IHT does not kick in until the estate reaches 325K. Under the Double Taxation Treaty between the UK and Serbia any tax payable there is allowable against any liability in the UK which might relieve the CGT bill a trifle. I do hope that you will find my reply of assistance.
Customer: replied 2 years ago.
Sorry to bother you but this is not that clear 100% to me.My wife owned property when she came to the uk, she is serbian nationality and now she is resident and works in the UK.
Properties in Serbia havent gained any value, actually value that it can be sold now is less than when she got it while being in Serbia.
Her mother is Serbian and has nothing to do with UK, she always lived there.
She will receive property as a gift from my wife and will pay 2.5% tax in serbia.My wife has sallary over 45k in the Uk. Will she need to pay any tax in the UK? she is not making any money as she is
giving property as a gift, and the value of property has declined due to the recession from 2008.Regards,
PRR relieves any gain at 100% if the property disposed of is her sole or main domestic residence. In any event as she is making a loss on the sale of her Serbian property there is no UK CGT anyway. Any loss made can be carried forward indefinitely to offset future gains or used to cover gains elsewhere in the tax year of sale. Your wife will be liable for UK Income Tax (IT) on her world wide income. She will be taxed on 45K less 10.6K personal allowance, ie on 34.4K. 31685 @ 20% [6337] and 2715 @ 40% [1086], total tax bill 7423. If she is not having tax deducted under PAYE then she must Self Assess at the end of the tax year, ie after 5 April 2016. Her gifts of property do not affect her IT position. I am so sorry to have to rain on your parade.
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Thank you for your support.