We find that people often believe, incorrectly, that they can gift their assets or property without any tax consequences.

If it is the type of asset whose disposal is subject to Capital Gains Tax (CGT), then the asset, when gifted, is deemed to have been disposed of at market value. This could trigger a capital gain if the value exceeds the allowable cost. With everyone’s annual exemption for CGT having reduced from £6,000 to £3,000 on 6 April 2024, more gains are potentially becoming chargeable to this tax.

It is therefore strongly recommended to get advice before the gift takes place so that you know the potential CGT consequences and can make an informed decision. There may, for example, be a Capital Gains Tax relief that can be claimed, if that specific tax relief’s strict conditions are met.

How M+A Partners can help

When gifting assets to a family member or friend, without receiving money in return or selling an asset at undervalue, it is important to consider, and get professional advice on, any subsequent tax consequences – including CGT, but also Inheritance Tax and Stamp Duty Land Tax.

The key point to return to, is that the transfer of the assets will be deemed to have been done at market value and this will have implications on the potential tax liabilities.

Deciding to gift an asset should be done in the context of your overall approach to tax planning and our experienced team of tax specialists are here to provide guidance suited to your situation.

If you have any queries regarding this topic, do get in touch with your normal M+A Partners’ contact or email me at mary-anne.sargeant@mapartners.co.uk.

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