Tax Questions

Tax questions 20th February 2013

My father recently gave me his property, however he continues to live in it. As he is quite elderly I am worried that there may be inheritance tax (IHT) to pay on it after his day. Please can you advise me?

Firstly as your father is still using the property for his benefit, this is known as a gift with reservation. This means that for the transfer to be effective for IHT then you have two options; 1) to charge him a market rent or 2) elect of the property to be included in his estate on his death. Now, whilst I can’t answer the question fully, his IHT position would depend on whether or not his assets are more than £325,000. So, if the house is his main asset, then you may not have anything to worry about, but you may need to take further advice.

We received a letter from HM Revenue & Customs regarding our child benefit. Our joint income is just over £60,000 so does this mean we won’t be able to receive the child benefit?

From the start of January 2013 if the household income is over £60,000 then you are no longer entitled to receive your child benefit. You may still receive the child benefit, however you will need to complete a tax return in order to pay it back. Alternatively you can ask HMRC to stop making the payments to you. A helpful factsheet can be found online at http://www.hmrc.gov.uk/childbenefitcharge/hicbc-helpsheet.pdf

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