Tax dodge of the week: Buying a second home for your kids
The new stamp duty surcharge will put many people off buying a second home. But for parents buying for their children, there may be a way around this.
The recent introduction of a stamp duty surcharge of three percentage points on second home purchases will understandably make many people think twice before buying another property. But for those parents who had previously considered buying a buy-to-let to eventually hand over to their children, there may be a way around this, writes Richard Dyson in The Daily Telegraph.
If your child is over 18 and you don't want to just hand over the cash for them to buy their own house straight away, you can set up a trust (the type of which will vary depending on how much control you want to retain), naming your child as beneficiary of the property. When buying property through a trust, HM Revenue & Customs treats the trust's beneficiary (in this case, your child) as the buyer. Assuming that your child doesn't already own a property, this means that the purchase will not be subject to the new stamp duty surcharge.
This method can also be useful from a capital-gains tax (CGT) perspective. If the property is the main residence of the child for example, if they live in it while at university it will benefit from CGT relief. However, you need to make sure that any savings won't be eclipsed by other tax consequences, such as inheritance tax charges. And, importantly, this wheeze only works if your child is over 18. HMRC has drafted legislation confirming that where beneficiaries are minors and parents as trustees own other property, the higher stamp duty would still apply.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Reeves warned against property tax shake-up – 3 ways it could backfire on first-time buyers
Rachel Reeves reportedly has her eye on high-end property taxes in the upcoming Budget, but there are concerns a shake-up could unintentionally hamper those trying to get on the housing ladder
-
Average Brits want to retire five years before they can – who has the widest retirement gap?
Brits are expecting to work for longer than ever but there are big disparities in the number of extra working years predicted. A small tweak could help close the gap
-
Simple assessment explained as millions brace for unexpected tax bills
Increasing numbers of people could get letters from HMRC saying they owe more tax due to frozen thresholds, under a system known as simple assessment. Here is what it means for you.
-
What are wealth taxes and would they work in Britain?
The Treasury is short of cash and mulling over how it can get its hands on more money to plug the gap. Could wealth taxes do the trick?
-
When is the self-assessment tax return deadline?
If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
Child Benefit: how it works, eligibility criteria and how to claim
Child Benefit is worth hundreds of pounds per year and claiming it can help build up your state pension entitlement. We look at who is eligible and how to get the payment
-
HMRC warning after scammers target 170k taxpayers – how to stay protected
Scammers are using increasingly sophisticated methods to trick people into sharing personal details or paying for fake self assessment tax refunds
-
HMRC rewarded tax informants with £850,000 as record fraud tip-offs sent to taxman last year
The taxman was tipped off about 164,670 cases of alleged fraud last year, but total rewards given to snoops fell in the 2024/5 tax year.
-
Inheritance tax investigations catch out 1200 more families in HMRC crackdown
Where there is a suspicion inheritance tax has been underpaid, HMRC has extensive powers to check the deceased individual’s financial affairs and chase what is owed. Will you pay more?
-
Do you still have to file a tax return if you don’t owe any tax?
Even if you do not owe the taxman any money, failure to complete and submit your tax return could result in a penalty costing you up to £1,600.