You are here: Home - News -

Inheritance Tax rules to create ‘teenage property millionaires’

by:
  • 25/01/2017
  • 0
Inheritance Tax rules to create ‘teenage property millionaires’
New Inheritance Tax rules may lead to a swathe of teenage property millionaires, accountants have warned.

Previously, non-domiciled families have not had to pay Inheritance Tax on property they own in the UK if they hold it through offshore companies. A study by the Financial Times in 2014 found that as much as £122bn of property in England and Wales is owned in this way.

However, the government plans to remove this loophole, ensuring that properties held in such trusts will now be subject to Inheritance Tax when the owner dies.

This may have the unintended consequence of creating groups of teenage millionaire property tycoons, however.

Speaking to the FT, Gary Heynes, the UK head of private client and family wealth at accountancy RSM, said that it had begun speaking with clients about whether they wanted to “de-envelope” properties, and gift them to the youngest adult in the family.

He said: “If you can push it down to the ownership of someone in their 20s or younger, you’ve deferred the IHT . . . it could create a group of 18 to 21 year-old property multimillionaires.”

Heynes added that if a family is worth £200m and has a £2m property, handing ownership of it to a teenager is relatively low, though he acknowledged there is a danger that the property will be neglected or of the teenager spending the money gained in rent from the property irresponsibly.

“Conversations like this need to be happening in families,” he concluded, while Chris Groves, a partner at Withers international law firm, told the FT that putting property in the name of the youngest member of the family was now a “logical thing” for families to consider.

The removal of the Inheritance Tax loophole is one of a number of measures announced by George Osborne in his final Budget as Chancellor last year, aimed at removing some of the perks non-doms enjoy.

There are 0 Comment(s)

You may also be interested in

Read previous post:
Methodist Insurance tops FCA list of home insurance claims

Methodist Insurance has had a higher percentage of claims on its home insurance products than any other firm, new data...

Close