CGT and inheritence

[Mark Hula]

Hi All,

It it true that the "7 year rule" has been abolished? i.e. can leave a gift
to someone and avoid CGT as long as the giver survives 7 years?
Is this correct?, or has it simply been altered?

Thanks

MC

 

[Doug Ramage]

Hi All,

It it true that the "7 year rule" has been abolished? i.e. can leave a gift
to someone and avoid CGT as long as the giver survives 7 years?
Is this correct?, or has it simply been altered?

Thanks

MC

No such rule for CGT. It still exists for IHT.

 

[Anthony R. Gold]

It it true that the "7 year rule" has been abolished? i.e. can leave a gift
to someone and avoid CGT as long as the giver survives 7 years?
Is this correct?, or has it simply been altered?

A capital gain is recognised immediately an inflated property (except when
of a type which is exempt, such as gilts, original life insurance
policies, commonly used types of motor vehicles, principal residences,
wasting assets, PEPs, ISAs etc) is disposed of, whether by sale or gift.

Tony

 

[Rob Graham]

commonly used types of motor vehicles,

I thought all motor vehicles were exempt.

Rob Graham

 

[Anthony R. Gold]

I thought all motor vehicles were exempt.

GCT/FS1 says "your private car" but I believe the underlying regulation
speak of "motor vehicles of types commonly used as, and suitable to be
used as, private vehicles for passenger travel". I guess this wording
prevents someone from claiming that a vehicle fabricated using bullion and
gems and papered with bearer bonds will escape taxation.

Tony

 

[Ronald Raygun]

GCT/FS1 says "your private car" but I believe the underlying regulation
speak of "motor vehicles of types commonly used as, and suitable to be
used as, private vehicles for passenger travel". I guess this wording
prevents someone from claiming that a vehicle fabricated using bullion and
gems and papered with bearer bonds will escape taxation.

It also means non-private cars, e.g. taxis or business vans etc, are
not exempt and therefore losses on them qualify for relief.

The main reason private cars are exempt is to disqualify them
from loss relief.

 

[David Floyd]

As a layperson, my understanding is that PETs relate to IHT and not CGT.
AFAIK, PETs are still alive and well (although there are persistent
rumours around Budget time each year that PETs will attract the
attention of the Chancellor).
Therefore, make a gift to someone and provided you survive 7 years, the
gift falls outside your estate for IHT purposes. Within the 7-year
period, taper applies after 4 years.

^^^^^^^

2 years

DF

 

[john boyle]

^^^^^^^

2 years

3 actually.

 

[David Floyd]

3 actually.

Quite right. Apologies.
DF

 

[Stephen Burke]

As a layperson, my understanding is that PETs relate to IHT and not
CGT. AFAIK, PETs are still alive and well (although there are
persistent rumours around Budget time each year that PETs will
attract the attention of the Chancellor).

I think the rumours come from financial advisers trying to drum up business,
I've seen no sign that GB is planning to reform IHT and if he'd seen it as a
priority he'd have done it long since. He certainly has no interest in tax
reform for its own sake.

Therefore, make a gift to someone and provided you survive 7 years,
the gift falls outside your estate for IHT purposes. Within the
7-year period, taper applies after 4 years.

As people usually point out, the exempt amount (250k or so) is applied to PETs
*before* tapering, so except for very large gifts you really do have to live 7
years.