Transfering ownership of a site & Inland Revenue

[GAA_Junkie]

My parents owned a bit of land and gave me a site on it.  I went to a solicitor and good the deeds transfered into my name.  In the pub one night someone mentioned that if its not transfered in a certain way the revenue wiill bite for 40% of the value of the site. 

Now that the deeds have been tranfered is there anyway I can avoid paying revenue a substantial amount of cash?  Is it too late?  If I say nothing will they notice?  Is there a period after which they can't touch us?

[pintsofguinness]

It doesnt matter how it's transfered if the value is over £125,000(I think that's the figure) Stamp duty is liable at something like 1% - it goes up gradually after that - you'd only pay 40% if the site was a couple of million. (edit: 4% is the highest - for over 500,000) - in the UK anyway.

If you havent paid stamp duty at the time of the transfer - forget about it. 

[GAA_Junkie]

Cheers Pint.  What do you mean when you say forget about it??

[pintsofguinness]

Cheers Pint.  What do you mean when you say forget about it??

I'll drop you pm.

[Smokin Joe]

Your parents could possibly be stung for Capital Gains Tax.

[pintsofguinness]

Your parents could possibly be stung for Capital Gains Tax.

Ach no one would find out.

[pintsofguinness]

Your parents could possibly be stung for Capital Gains Tax.

Ach no one would find out.

Anyway, they'd only be liable for CGT if he paid them for it?  No?

[Square Ball]

Big Brother is watching Pints  

[tieroan]

Tell me if you bought a site from your parents do they have to pay the revenue?

[pintsofguinness]

Tell me if you bought a site from your parents do they have to pay the revenue?

Pints would say No forget about it but as Joe points out - they'd probably be liable for Captial Gains Tax.

[magickingdom]

tell your ma the revenue took the price of the site off you and ask her to give you another one. then say nothing to the revenue and keep the two of them. dont tell your mates in the pub

alternativaly if your serious check out the threshold for gift tax in the uk, in the case of parent to child it should be big enough to cover the cost of the site. in future dont get your tax advice in the pub

[supersarsfields]

From my understanding of things CGT will only come into play if your parents pass away within 7 years of the deeds being passed over. But Again I'm not 100% on that.

[Smokin Joe]

Here is the textbook answer in the UK:

There are potentially 2 taxes involved:
CGT:
As the sale wasn't at arms length the Revenue will use the market value of the land as the deemed proceeds and base any capital gain on that basis. The gain is taxable at the parent's marginal tax rate (ie it will be added to their income (after allowing for £9,200 annual CGT allowance) and taxed accordingly).

Inheritence Tax:
Should the parents die within 7 years then the dimuition in value (ie what their "landbank" was wrth before the transaction less what their "landbank" is worth after the transaction) of their land is potentially taxable.
On the date of their death they look back 7 years and add back any potentially extempt transactions (PETS) to their value of the estate at death.  Their is currently an allowance of £300k - anything in excess of that is taxed at 40%.

The only form of "gift relief" in the UK is that you can give away upto £3k per annum away and it doesn't count as a PET.  If you get married a parent can also give you an additional £5k without it counting as a PET, other than that gift relief doesn't exist in the UK.

[supersarsfields]

Yeah sorry it was my mistake, It was inheritence tax I was thinking of not CGT. But I think it will still apply to you GAA junkie

[GAA_Junkie]

Cheers for the info lads.

Smokin - Could you explain "The gain is taxable at the parent's marginal tax rate (ie it will be added to their income (after allowing for £9,200 annual CGT allowance) and taxed accordingly)."  In lay mans terms.  I.e. if the site is valued around 150k what sort of money will it cost. 

I dug out the invoice from the solicitor who handled the transfer and stamp duty is included in it.  £480 to tranfer the land into my name, including land taxes and stamp duty.