My client (A) lives with her daughter (B) and son-in-law (C) as well as their young children. The property originally was a small bungalow, however, in 2022 B and C sold their own house, moved into A’s Property and paid (from their own net proceeds of sale) for an extension on the property creating a much larger (more valuable) property. The idea being that whilst they have young children and A is able to she can help out with childcare, etc., but when A is older B and C can help care for her so she doesn’t need to move into a care home, etc.
In 2022 a Declaration of Trust was put into place to protect B and C’s investment and at the time it was agreed that the beneficial ownership of the property would be set out as follows:
A: 5/6 share
B & C: 1/6 share TIC equally
A now wants to gift 2/3rd of her 5/6th share to B alone so that the shares will look like this (hopefully my fractions are correct and feel free to let me know if they’re not!):
A: 1/6 share
B & C: 1/6th share equally as TIC
B: 4/6th share
My concern is that A won’t be holding on to an equal share of the property and this could fall foul of GWROB rules… whilst I appreciate s. 102b(4) FA doesn’t make reference to actual percentages, I note from the IHT manual that :-
“The joint property examples are on the basis that the joint owners take the property in equal shares. Refer any case in which the transferor takes less than an equal share to Technical.”
Anyone come across a similar situation or received more specific guidance from HMRC on this?
Thanks.