Let’s talk of BTL & Inheritance tax.
Up and down the land, round and round the world, there are outposts of the enterprise The Body Shop. The first outlet still operates in Brighton, East Sussex. The south-coast city is where its founder, Anita Lucia Perella, grew up.
Anita’s parents landed on these shores from Italy.
When Anita was a girl, her mother opened a café in East Sussex. The patrons in their bafflement asked: ‘What’s a quechee?’ The eatery was a failure.
We knew not what a quiche was. It occupied yet another seat on the train of exotic cuisine. In those days, olive oil was something your mum got from the chemist for a mild earache. By the 1990s the quiche was no longer in the cellar of consciousness. Although now, it is so unfashionable as to be pitied by silence.
I suppose in comedy as in politics, all turns on timing.
Thus, we alight on the possible inheritance tax liability on you BTL portfolio.
Many own rental property. Some have rental portfolios. Some such portfolios verge on empires. All are loath to have to pay inheritance tax on their estates – the prevailing rate being forty pence in the pound.
Bricks and mortar have been specifically excluded from business property relief (BPR) by which most other businesses are inheritable with zero liability to inheritance tax.
Alas, there’s a big painful interaction between BTL & inheritance tax: I’ve looked and asked, studied and queried so you don’t have to. I fell on all the relevant intelligence like a famished fox. Be sure, BPR is not available on buy-to-let property.
Like Hamlet, by your skill and sweat, you got the means to accumulate these properties for your kith and kin.
You’d like to give your children a million-pound portfolio rather than a £600,000 portfolio.
The Tragedy of BTL & Inheritance Tax
Oh, the tragedy of BTL & inheritance tax.
It remains a tragedy for the ill-prepared and the ill-schooled. You’ve the tools, you can temper the tragedy of inheritance tax so it becomes a mere nuisance.
Simply give away the asset in question. It’s the seven-year rule. Survive a gift by seven years and the beneficiary is home free – no death duties to pay.
Edward Fitzgerald professed: the leaves of life keep falling one by one.
He’s not of my profession, he’s not a party of my vocation, he writes not to our purpose.
To our intentions, he knows not when the tree of life exhausts its leaves.
The tree: it’s evergreen till it’s not.
None of us know how many years away we are from no longer being of this world, hence the difficulty in timing a gift of rental property.
Rare is the trouble that comes as a single spy without gilding.
BTL & Inheritance Tax: Keeping the Income
The kernel of the problem is parting the income from the asset.
You’re minded to give away the property but you need the income. Selling the asset and banking the cash would create a capital gains liability. Woe is us. If they don’t get you going, they’ll certainly get you coming.
‘Tis the reason you have me. I’ll provide the solution.
You can cleave the income from the asset. You may give away the property today and keep the income as long as you wish.
No annoying business of trying to time the gift, none of the wretched palaver of worrying about running out of money, and no fear of the possible indignity of the property being ripped away from you.
Yes, you can do all that.
I’m not just a pretty face, you know.
Further, I’ll help you prevent BTL & inheritance tax becoming a problem, prevent IHT being payable on this asset for future generations – no 40% tax each time this asset is passed from one generation to the next.
Time is a tease, because everything must happen in its own time. To talk about BTL & inheritance tax, and anything relating to inheritance planning, simply call me.
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