Double Charges Relief - Inheritance Tax

I have a client who is planning to swap houses with his daughter. Both houses are worth approximately the same amount (£750,000) and there will be a total swap of ownership and occupation. Both properties are currently the main residence of each party. My client’s estate is worth over £3 million in total - if he dies within 7 years of making the gift to his daughter, would double charges relief apply given that he is receiving an equivalently valued property back from her? I wasn’t sure whether it would be considered to be ‘indirectly’ representing the property he gifted and also the transactions will be happening simultaneously.

Kathryn Caple
Else Solicitors

On the face of this is an exchange for full value and on terms equivalent to arm’s length and therefore no transfer of value at all- sec 10 IHTA.

No doubt there is a considerable temptation from the point of view of SDLT to present it as two unrelated gifts- which should I think be resisted.

Tim Gibbons

This appears to be a commercial exchange not a gift, so iht should be irrelevant-but SDLT will apply to each I assume

Simon Northcott

This doesn’t look like a gift to me, but an exchange of properties. The only gift element would be to the extent of any difference in value, so if that is not significant there will be no IHT issues.

CGT should not be a problem if each property is the main residence of the current owner, but I believe SDLT will be payable, and could be quite substantial, although you should avoid the 3% surcharge.

Diana Smart
Gordons LLP