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Stuart J
Stuart J, Solicitor
Category: UK Law
Satisfied Customers: 22386
Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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Several years prior to his death my father had his house transferred

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Several years prior to his death my father had his house transferred into his children's names - mine and my siblings - without telling us. We never signed anything! Still, it seems he was able to do this. However, he continued to live in the house until his (recent) death. We are receiving conflicting advice over the tax situation: some advisers tell us that we will be liable for both UK Inheritance Tax (as he continued to live in the house) and UK Capital Gains Tax to cover the period the property was transferred into our names. Other advisers tell us that we have a clear case in law to contest the notion of taxing the same asset twice, as this could in theory amount to an 80% tax on the house, which was clearly not the intention of either my later father or the HMRC. Obviously, it seems absurdly unjust to tax the asset twice; we cannot be the first people to experience this situation. Which advice is correct?

Hello, I am Law Denning and I am a practising solicitor in a High Street practice. I have been an expert on this website in UK law since 2008. During that time, as you appreciate, I have answered thousands of questions from satisfied users on a variety of subjects.

Because we are all in practice with clients and court and other users, I might not always respond in minutes, particularly evenings and weekends. Please bear with me in that case

It is my pleasure to try and assist you with this today.

He made a gift with reservation (he continued to live it) so for IHT purposes they treat it as though the transfer didn’t take place. They look on it as a sham transfer done to avoid IHT (which is what it was.).

IHT is payable on the estate value, not the house itself ,. The house is just part of it.

If you don’t sell the house ever or sell at acquisition value, you pay no CGT.

It isn’t double taxation because you only pay CGT on the gain which hasn’t already been taxed. It is extra money that you get taxed on…the gain

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Customer: replied 3 years ago.
I am not clear from your response whether or not you are saying that CGT is payable on the increase in value from the date of the transfer, or from the date of my father's death. If the transfer is deemed to be a "sham transfer" as you have described it, HMRC would certainly be having two bites of the cherry in taxing the asset from the date of transfer as well as IHT from the date of death: surely the transfer was either valid or it was not; this is my area of confusion.

In my original enquiry, I marked my request as low in urgency, but high in detail: I do not feel that I have received a detailed reply, and I should like to know in particular of any legal precedents. As I indicated, I am sure we are not the first bereaved beneficiaries to find ourselves in this position.
If it is seen as sham transfer, they get tax on the date of real acquisition/transfer. They cant have it both ways.
Researching extensive complex tax law precedents is beyond the scope of this site and tax barrister will charge you £1000-£1200 plus vat for detailed avice.
If you want that level of detail I am unable to assist further and will opt out.
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