• Is Consideration Different From Purchase Price?

    By Guest on 22nd Aug 2019

    I am gifting equity worth £300k to my son purchasing my property worth £700k. I will receive £400k on completion, although I am being advised that I need to pay Capital Gains tax on full Market value. My solicitor and my sons solicitors are arguing regarding panel 8 of the Tr1. My solicitor is saying it shpuld be only £400k whereas my son's solcitors are saying it should be £700k. Wondering if you could through some light on it.

  • 2 Answers

    By Guest on 23/08/2019

    It is £400 the remainder was a gift

  • By Guest on 23/08/2019

    Consideration can be different from purchase price, yes. The amount being paid for Panel 8 of the TR1 is literally the amount changing hands, i.e. £400,000.

    To use another example, we have cases where someone gifts property, for example one spouse gifting property to another, or a director gifting a property into his company. If no money changes hands the consideration in Panel 8 of the TR1 will be nil. That would not however change the fact that the director needs to pay SDLT on the full market value for the transfer to a connected company.

    Capital Gains Tax (CGT) is outside my area of expertise (ask an accountant) but whether or not £700,000 is the amount for CGT, the amount on the TR1 is £400,000. Incidentally it would be different if the £300,000 was by way of loan rather than gift. If the £300,000 was loaned then he would be paying £400,000 cash and £300,000 by way of debt and thus panel 8 in that case would be £700,000.

    www.notaryexpress.co.uk

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