Christmas: a time to think about capital gains tax
Thinking of giving your children or grandchildren a nice family heirloom for Christmas? Beware: it will almost certainly be liable for tax, one way or another.
Thinking of giving your children or grandchildren a nice family heirloom for Christmas? You might want to think again.
Let's say you want to give a grandchild a nice painting, one that's been hanging in your house for generations. If it is worth under £6,000, you can do so with no bother. But if it is worth more than £6,000 and has gone up in nominal value since its purchase (almost inevitable in a world of deliberate inflation), you will need to pay capital gains tax on that rise in value in exactly the same way you would have had to had you sold it to a stranger.
That's not all. If you die within seven years, it could also be included as part of your estate for inheritance tax purposes. Then, says accountant Baker Tilly, more tax will be due. The same goes for any gifts to partners or girlfriends.
If you are married, you can give anything you like to each other tax-free, but hand a nice piece of inherited jewellery over to a partner you are not in an official partnership with and the tax hit is the same capital gains is payable.
There's more. Are you a non-dom? If so, you can give gifts to adult friends and children without any trouble. But if you hand anything over to a relevant person' it will count as remitting income or gains to the UK, and so be liable for either one of those taxes. Relevant people are spouses, co-habitees and any minor children or grandchildren.
It isn't very Christmassy but there it is: there is almost no such thing as an untaxed transaction in the UK.