The Situation:
Mr. and Mrs. Evans, in their 80s, have a £1.2 million estate, which includes a second property, a holiday cottage worth £300,000. They want to help their daughter, Emma, and reduce their family’s Inheritance Tax (IHT) bill.
Gifting the Holiday Home
The Problem:
Without any plan, their estate would likely face an IHT bill of around £80,000, forcing their daughter to potentially sell assets, including the family home, to pay the tax.
The Solution:
We advised the Evans family on a strategy to gift the holiday cottage to their daughter. This decision immediately removed the £300,000 value from their taxable estate for IHT purposes. The gift is a Potentially Exempt Transfer (PET), meaning that if the Evans live for seven years after making the gift, the property becomes fully exempt from IHT.
Note: This strategy required careful consideration of other taxes, such as Capital Gains Tax, and the full understanding that Mr. & Mrs. Evans would lose legal control of the property. Other options could have been considered for longer-term protection, such as the use of trusts.
Get In Touch:
With the right advice, you can pass more of your estate to your loved ones and reduce the Inheritance Tax bill they face.
At Hedges Law, we’ll guide you through every option, whether it’s gifting property, using trusts, or other tax-efficient strategies, so your family keeps more of what you’ve worked hard for.
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