The most important principle to grasp in a case such as this is that the amount chargeable to inheritance tax (IHT) is not the value of what was given away, it is the reduction in value of the individual's estate as a result of the disposition, at the date it was made. This follows from the wording of section 3(1) of the Inheritance Tax Act 1984 (IHTA 1984). Unfortunately, the relevant HMRC form (form IHT403) does not make reference to this fact and refers merely to the 'value' of the assets given, so the point is not as obvious as it could be. This principle is relevant when considering the gift of a share of a property because the value of a share of a property is almost always less than the relevant proportion of the value

Primary Class 1 National Insurance contributions (NICs) and Class 2 NICs are not payable by a person after they have reached pensionable age, irrespective of when they were earned, provided that the earnings would normally be payable at that time (sections 6(3) and 122(1) of the Social Security Contributions and Benefits Act 1992, Social Security (Contributions) Regulations 2001 (SS(C)R 2001), SI 2001/1004, reg 28). See: • the section of Practice Note: Employment status—why it matters entitled: Rates and structure of NICs

You have asked: An individual owns a property which they want to leave to the current tenant (who occupies under an Assured Shorthold Tenancy (AST)) on a life interest trust. How should the AST be terminated on the landlord's death (for example, by Will or by letter of wishes to the executors)? If the tenant pays rent under the AST to the trustees (to which the tenant is entitled as life tenant of the life interest trust), what effect does this have on the AST? If the testator were to leave a life interest in the property

Public footpath There are a number of public rights of way available within England and Wales, all of which may have slightly different rules and restrictions. These include public footpaths which are open only to walkers. Since a right to cycle over the land concerned could have been lawfully granted, it can be acquired by prescription. Easements may be acquired through prescription, which entitles someone to an easement once they have exercised rights over another person’s land for 20 years, without using force or stealth or acting pursuant to a licence. For further information, see: • Practice Notes: ◦ Acquisition

The sale of the new property would not trigger an entitlement to reclaim the SDLT attributable to the higher rates. Whether or not there is such an entitlement turns on whether there is a qualifying disposal of the old main residence. The legislation requires the disposal of the old main residence to be made by the

Under section 575(6) of the Capital Allowances Act 2001 (CAA 2001), a company is connected with an individual if: • that individual has control of the company, or • that individual together with persons connected to them have control of the company So the individual will be connected with their brother’s company if they and their brother together control the company. If the individual and the company are connected to each other, the buyer cannot claim an annual investment allowance or first-year allowance for its expenditure under the sale. If the seller has to bring a disposal value into account, the expenditure

Effect of bankruptcy generally Although any beneficial interest in a property (and, where the property was solely-owned, the legal title as well) that vested in the bankrupt prior to the bankruptcy order will vest in the trustee in bankruptcy (trustee), the trustee's real concern is with the beneficial interest, being the unencumbered value in the property. Under section 284 of the Insolvency Act 1986 (IA 1986), any disposition of the bankrupt's property in the period between the presentation of the bankruptcy petition and the vesting of the bankruptcy estate in a trustee under

Where an individual makes a gift of property (not just land, but property in the wider sense), that property is only a property subject to a reservation if at any time in the relevant period, the property is not enjoyed to the entire exclusion, or virtually to the entire exclusion, of that individual and of any benefit to him by contract or otherwise (see section 102(1)(b) of the Finance Act 1986 (FA 1986)). Occupation for a few weeks each year by such an individual of land which he or she has given away may therefore fall within the 'virtually to the entire exclusion' exception. See Example 1 in IHTM14333. See also HMRC interpretation RI 55 (November 1993) Inheritance tax-gifts with reservation. If

This Q&A assumes that limitation—this Q&A has not considered the inheritance tax implications of the proposed arrangement. Where a UK-resident and domiciled settlor reserves to themselves certain powers under a trust, it may have implications for the tax residence of the trust. In extreme cases, it may also result in the trust being held to be a sham. See Practice Notes: Management and control of trusts, Tax position of non-resident trusts, and Trust disputes—sham trusts. In order to avoid the trust being resident in the UK, not only must

This Q&A assumes that that the investment property which is already owned by the individual is a dwelling which is occupied by a tenant or tenants. Schedule 4ZA to the Finance Act 2003 (FA 2003) amends the rates of SDLT in FA 2003, s 55 where the chargeable transaction is a 'higher rates transaction' and, if it is, it attracts a 3% supplementary rate of SDLT. In the case of a transaction where there is only one purchaser, FA 2003, Sch 4ZA Pt 2 para 2(2), states a transaction is a ‘higher rates transaction’ if it falls

Where a life assurance policy is held subject to the terms of a trust, the life assurance company would usually endorse the policy document to indicate that the policy is held in trust, but the life company may not hold the original trust deed (or a copy). If the life assurance policy had been issued to trustees from outset, following the completion of a request as part of the application for the policy, the life assurance company's records would show the trustees as the policyholders. The life company's records should also show the names of

Gift of property An individual may give away property during their lifetime or on death. In either case, the gift may be made either outright or settled on trust. The individual may decide to give away the entire interest in the property or to retain an interest himself during his lifetime such that he becomes co-owner of the property along with the adult child/trustees of the trust for the adult child. In terms of lifetime gifts, you may find the following