Gifting one half of main residence to son and daughter as a lifetime gift

I am a financial planner looking at helping a fixed asset rich, liquid asset poor client reduce their long term IHT position.

He is minded to gift one half of his home to his son and daughter (in equal shares) and pay them one half of the market rent for the property. If they were to do this are there any POAT or GROB implications to be aware of?

Many thanks

Stuart Evans
Common Sense FPL

Hi Stuart,

POAT is only applicable if GROB does not apply, my understanding anyway, i.e you caught by one or the other.

On the assumption GROB is applicable, then gifting the property and paying a ‘market rent’ agreed formally, with documented payments (not ad-hoc) then GROB may well not apply.

The rules are complex and personally I would not advise on such a scheme, if the property value is high; example over £1 million then HMRC may contest the arrangement. The GAAR rules may come into affect if the only reason for gifting is to avoid IHT with the attempt to create a PET.

With the RNRB and TRNRB now available I would suggest gifting the main home is not always the best option.

Richard Bishop