my mother has gifted my brother land to build his house on, she has accepted no money for this. Are either of them liable for CGT?
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carmac123
1 month ago
Expert Financial Adviser Answer
Darren Smith
answered 1 month ago
Hello (sorry i dont know your name as you didnt post it!)
in terms of your brother, there is no CGT liability as he received the asset however from your mother's perspective, the transfer of the asset is regarded as a disposal for CGT purposes even though no cash was paid. HMRC will regard the disposal as liable to CGT if your mother has realised a gain above her CGT allowance for the current year (£10600 after all allowable expenses) but if this has come from dividing land from her home (ie her principal primary residence) then they should be ok.
i am surprised that the conveyancer that dealt with land registry for them didnt look into this as a part of their duties.
it is also important to bear in mind (as it was a gift) that the sum would be considered liable for inheritance tax (IHT) if your mother were to die within 7 yrs of making this gift, the value would be clawed back into her estate and assessed against the estate for IHT if the value of all of her assets exceeds the prevailing nil rate band (currently £325000) therefore there might be a bigger issue as IHT is charged at 40% rather than the 18/28% for CGT.
there are many other allowances and deductions that might mitigate the issue but there are too many to cover off in this type of forum.
I would recommend that you speak to your mother about seeing a local professional for further assistance - this could be an IFA or a solicitor that specialises in estate planning (usually comes under "private client" services).
feel free to get in touch directly if you need further help, dont publish too much personal data here and of course, the above is just an outline and cannot be considered advice without a more thorough investigation of the situation.
darrenasmith@2plan.com
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in terms of your brother, there is no CGT liability as he received the asset however from your mother's perspective, the transfer of the asset is regarded as a disposal for CGT purposes even though no cash was paid. HMRC will regard the disposal as liable to CGT if your mother has realised a gain above her CGT allowance for the current year (£10600 after all allowable expenses) but if this has come from dividing land from her home (ie her principal primary residence) then they should be ok.
i am surprised that the conveyancer that dealt with land registry for them didnt look into this as a part of their duties.
it is also important to bear in mind (as it was a gift) that the sum would be considered liable for inheritance tax (IHT) if your mother were to die within 7 yrs of making this gift, the value would be clawed back into her estate and assessed against the estate for IHT if the value of all of her assets exceeds the prevailing nil rate band (currently £325000) therefore there might be a bigger issue as IHT is charged at 40% rather than the 18/28% for CGT.
there are many other allowances and deductions that might mitigate the issue but there are too many to cover off in this type of forum.
I would recommend that you speak to your mother about seeing a local professional for further assistance - this could be an IFA or a solicitor that specialises in estate planning (usually comes under "private client" services).
feel free to get in touch directly if you need further help, dont publish too much personal data here and of course, the above is just an outline and cannot be considered advice without a more thorough investigation of the situation.
darrenasmith@2plan.com