Posted by Louise Misiewicz
Do your parents have assets?
Do you have an elderly parent that may need to pay for their care?
This article has been written because of my own circumstances and the fact that my wife had to sell her parent’s hard earned assets to pay for their care. This is despite paying National Insurance all of their lives. At the end of it there was not much to show for their hard work.
Wealth & tax tip:
How can you get around this? – Gift the assets when the are in sound mind.
Strictly the word `gift’ should only be used to describe a transfer from one person to another for no consideration at all, including gifts in settlement to trustees (1).
Because a gift is not a bargain at arm’s length, the person making the gift is treated as disposing of the asset at market value, unless it is a situation within the paragraph below headed ‘No gain/No loss transfers’ (2).
Relief may also be available when a person becomes entitled to a trust property or in other cases where trustees are treated as if they had made a disposal, except in cases concerning anti-avoidance provisions (3).
If you give away your property, all or part of your gain may be postponed until the property is sold. In most cases the person you give it to will pay Capital Gains Tax (5).
The person disposing of the asset can also claim the following reliefs on CGT:
- Private Residence Relief(4)
- Business asset roll over relief (5)
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(1)HMRC – CG66450 – Gifts: introduction
(2)HMRC – CG12920 – Gifts: introduction
(3)HMRC – Relief For Gifts And Similar Transactions
(4)Capital Gains Tax Relief On Your Own Home
(5)Capital Gains Tax Reliefs On Property That’s Not Your Main Home