My wife and I are UK residents and joint owners of a small apartment in Switzerland which we would like to gift to our children. According to Swiss rules, this is tax free as long as we give it to the family. If we decide to move forward, what is the position regarding HM Revenue & Customs? Will it attract capital gains tax or inheritance tax?
Berry Bloomberg, partner in the Geneva office of law firm Withersworldwide, It says that as you are a UK resident, this donation may give rise to a capital gains charge (CGT). You also have the potential to be subject to inheritance tax (IHT).
Under current rules, if you are not domiciled or considered domiciled in the UK, the gift will fall outside the scope of IHT and you will be able to avoid a CGT liability by claiming the “remittance basis”.
Following the Budget announcements on 6 March, from 6 April 2025 the remittance base will no longer be available, but you will be exempt from CGT if you have been resident in the UK for less than four tax years. IHT will apply to worldwide donations once you have been resident in the UK for 10 years. There may be further changes if Labor wins the next general election.
Subject to this, you will each be liable for CGT on your share of the gain on the property, at a rate of 18 per cent at the basic rate or 24 per cent at the higher rate. The taxable gain will be equal to the market value of the property when you make the gift, less its value when you acquired it and any allowable deductions.
If you have claimed the remittance basis and are not domiciled or deemed to be domiciled before 6 April 2025, you may have the option to “roll over” the property to its value on 5 April 2019, meaning you only You will pay CGT on any winnings after that date. .
The principal private residence exemption may exempt some or all of the gain obtained from the disposition of a home. However, the property must have been your “primary residence” at some point. Additionally, as of April 6, 2025, you must have resided in the country where the property is located or have spent at least 90 nights at the property in a year.
As for IHT, if you are subject to this, the gift of the property to your children will be free of IHT if you live seven years from the date of the gift. You can take out a life insurance policy to cover the risk of an IHT charge if you die within seven years.
Crucially, even after seven years have passed, the value of the property will be recovered in your taxable estate if you are deemed to have “reserved a benefit”, for example because you continue to use the property or derive some other benefit from it. . he. There are several ways to avoid this, for example by holding a share or paying a market rent.
Finally, it is important to understand how Switzerland will tax the donation. While Switzerland does not impose inheritance or capital gains taxes at the federal level, individual cantons have different rules, and some impose gift taxes on descendants. If you were subject to tax in both the UK and Switzerland, you would have to resort to the double taxation treaty to avoid paying tax twice.
Should we share a divorce lawyer?
My husband and I have decided to divorce after 32 years of marriage; We have two older children. My husband is trying to save money and insists that we use only one attorney, but I’m not sure I agree. Everyone I know has had their own attorney to personally advise them through the process. I am less financially savvy than my husband and I want to make sure my interests are properly taken care of.
Ffion Greenfield, Senior Associate at Burgess Mee Family Law, says that sharing a lawyer to advise you on your divorce and how to divide your finances after your separation is a relatively new way to approach divorce, but it offers benefits.
If you can work together, using a single attorney could reduce costs for you and your husband, as well as be faster than the traditional divorce route, where people each have one attorney.
One benefit of sharing an attorney is that it encourages collaborative discussions between you and your husband so that each of you feels well-informed and in control of the decisions you ultimately make about your finances. It should also help minimize any resentment between you, ideally easing the potential emotional burden on you and your children, which can be crucial to the emotional well-being of your entire family during the divorce process and beyond.
However, if you hire a lawyer together, you must act impartially and transparently. They will advise you and your husband together on your options using the benchmark of what the court would consider a fair outcome for both of you, so that the final agreement meets your needs.
The attorney you choose can help you with the financial disclosure process and will take the time to ensure that each of you feel fully informed about your financial situation. This will be particularly important in your case where you believe you have less knowledge of how the family finances were managed during the marriage.
If talks reach an impasse, you and your husband may be referred to mediation to try to overcome the obstacle and hopefully allow for an agreement. Alternatively, if there is a discrete point that prevents reaching an agreement through a single attorney, it can be referred to an arbitrator who can issue a binding decision on that point.
If you reach an agreement through your attorney, they can turn it into a court order that, once approved by the court, will provide you with a final, binding and enforceable agreement.
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I promised to leave property to my daughter but now I have changed my mind. Do I have to move on?
However, if your case is particularly complicated (for example, if you are concerned that your husband is hiding assets or not being honest about finances, if there is a significant power imbalance, or if there has been domestic abuse in your relationship), use the It is unlikely that the same attorney will be the right choice for you.
For you and your husband to get the most out of sharing a lawyer, you must both commit to working together in an amicable and transparent manner to reach a fair resolution.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. Financial Times Ltd and the authors are not responsible for any direct or indirect results arising from any reliance placed on the responses, including any loss, and exclude all liability.
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