Appleleaf Accountancy
Client Portal
  • Home
  • About Us
  • Services
    • Management Accounts
    • Accounts Preparation
    • Business Start-Up Support
    • Bookkeeping Services and VAT Returns
    • Cloud-Based Software Solutions
    • Payroll, PAYE and Auto Enrolment
    • Company Secretarial
    • Company Formations
    • Personal Tax and Tax Planning
    • Contractors and IR35
  • Testimonials
  • Advisory
  • News
    • News
    • Autumn Statement 2023
    • Spring Budget Report 2023
    • Autumn Statement 2022
    • Mini Budget 2022
    • Spring Statement 2022
    • Autumn Budget 2021
  • Client Portal
  • Get in Touch
Client Portal

Slide News
House

Investment properties – should I pay Capital Gains Tax or Inheritance Tax

creative772022-06-29T10:06:43+01:00

Sometimes there is a choice of which tax to pay and where a person owns an investment property, they may be able to exercise a degree of choice whether they take a capital gains tax hit, or their beneficiaries pay inheritance tax.

However, there is something of a gamble here – while capital gains tax (CGT) is chargeable at a lower rate than inheritance tax (IHT), if the donor fails to live for at least seven years from the date of the gift, IHT may also be payable.

CGT and gifts

The capital gains tax rules on gifts depend on the relationship between the donor and the recipient. Where an asset is given to a spouse or civil partner, no capital gains tax is payable as the transfer is deemed to be at a value that gives rise to neither a gain nor a loss.

If the gift is to a connected person, such as a child, the transfer is deemed to be at market value (regardless of whether any consideration changes hands). A gift to someone else other than at arms’ length is also deemed to be at market value. This may trigger a capital gains tax liability on the donor.

However, if an asset is left to a person on death, there is no capital gains tax to pay. The property is included in the deceased’s estate at market value. While there may be IHT to pay, there is a tax-free uplift for capital gains tax purposes as the beneficiary’s base cost for CGT is the market value at death.

Gifts and inheritance tax

Lifetime gifts (other than to spouses and civil partners) are potentially exempt transfers for inheritance tax at the time that they are made.

There is no inheritance tax to pay at the time of the gift. However, if the donor does not survive seven years from the date of the gift, the gift is taken into account when working out inheritance tax on death.

Depending on the value of the estate and whether the nil rate band has already been utilised, inheritance tax may be payable, even if capital gains tax was paid by the donor. While taper relief is available where the donor survives at least three years, there is no relief for any capital gains tax paid on the gift.

There is no inheritance tax on gifts to spouses and civil partners, whether made during the donor’s lifetime or on death.

When considering investing in property there are a lot of things that you need to consider and seeking professional advice before taking the leap is extremely important. Fortunately, we are experts in this area so if you want to know more or do you need more detailed advice on any of the above please contact us on 01472 287387.

Share this post

Facebook Twitter LinkedIn Google + Email

Related Posts

Defer Your Self-Assessment Payment On Account Due To Coronavirus (COVID-19)

Choose how and when you can delay making your second payment on account for the 2019 to 2020 tax year. You... read more

stamp duty land tax on non-residential properties

Stamp duty land tax (SDLT) is payable in England and Northern Ireland on the purchase of property over a certain... read more

Coronavirus Job Retention Scheme (CJRS) – Individuals You Can Claim For Who Are Not Employees

From 1 July 2020 “Flexible Furlough” was introduced and the calculations and time recording of full-time, part-time and fully furloughed... read more

Vat

VAT flat rate scheme – is it worthwhile?

The amount of VAT a business pays or claims back from HMRC is the difference between the VAT charged by... read more

simplified expenses for smaller businesses

Certain unincorporated small businesses may choose to use the ‘cash basis’ when calculating taxable income, under which participants are taxed... read more

Reporting Income from Property

The deadline for filing the 2020/21 self-assessment tax return online is 31 January 2022. Did you know that if you received... read more

family finances

how tax planning could minimise the high income child benefit charge

As of 6 April 2019 the higher rate tax threshold has been increased to £50,000, which is good news for... read more

savings

How to enjoy savings income tax-free

As every penny counts more than ever now, there are various ways you can enjoy income, or basically the interest... read more

don’t forget: online self-assessments and payments on account need to be submitted january 31st

Time is running out. If you need to and you haven’t filed your online self-assessment tax return for 2018/19 yet… It’s time... read more

Construction Workers

MTD – What is on the horizon and what do construction businesses need to know about

There have been a lot of changes in the construction industry lately - most recently, the introduction of MTD for... read more

Archives

Categories

  • Accounts
  • Brexit
  • Covid-19
  • Employee
  • Employer
  • News
  • Office News
  • Pension
  • Quick Bites
  • Scams
  • Self Employed
  • Tax Tips
  • VAT

We hate goodbyes...

Keep in touch and get the latest information

Just pop your email address in the form below to receive our newsletter and we’ll send a downloadable copy of the Making Tax Digital Fact Sheet and Action Plan direct to your inbox.

Where are we?

Appleleaf Accountancy and Tax Limited,
5 Town Hall Street, Grimsby, North East Lincolnshire, DN31 1HN

Get in touch!

01472 287387
info@appleleafaccountancy.co.uk
Facebook Twitter Linkedin
© Copyright Appleleaf | Privacy
Website by The Creative Agency
  • Main Menu
  • Top Navigation
  • Home
  • About Us
  • Services
    • Management Accounts
    • Accounts Preparation
    • Business Start-Up Support
    • Bookkeeping Services and VAT Returns
    • Cloud-Based Software Solutions
    • Payroll, PAYE and Auto Enrolment
    • Company Secretarial
    • Company Formations
    • Personal Tax and Tax Planning
    • Contractors and IR35
  • Testimonials
  • Advisory
  • News
    • News
    • Autumn Statement 2023
    • Spring Budget Report 2023
    • Autumn Statement 2022
    • Mini Budget 2022
    • Spring Statement 2022
    • Autumn Budget 2021
  • Client Portal
  • Get in Touch

Receive our newsletter to keep you up to date on the latest news, tax tips and a whole host of accountancy advice to help you and your business.

Name
johnsmith@example.com

Never see this message again.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.OkPrivacy policy