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  • Tax

    Saving on capital gains tax by gifting profit

    Hi all,

    Firstly Happy New Year to you all!

    I know someone whom has sold a property recently and apparently is Gifting some of the profits from the sale to one of his relatives.

    He informs me that this will reduce his Capital Gains that he's due to pay (as long as he doens't die in within 7 years).

    I's a appreciate your views on this, specifically from a Property Tax specialist.

    My thought is HMRC want their "Pound of flesh" (i.e. you have to pay the CGT) first, then you can gift after that?

    Regards

    Daren

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    If he is beneficially entitled to the capital proceeds on the sale of the property then he’s subject to the tax on it. I think your friend is getting confused between CGT and IHT. The seven year rule applies to lifetime transfers and if no IHT is paid its a PET and falls outside the taxable estate after 7 years (assuming he’s truly given it away).

    There are CGT reliefs for investing proceeds but not gifting. Otherwise we’d all be doing it!

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Thanks for your feedback Stuart.

    Regarding the comment "We'd all be doing it"...I agree....but I had to ask ;-)

    Daren

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