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Tricky transfer

27 May 2009
Issue: 4207 / Categories: Forum & Feedback
A non-domiciled husband transferred a UK investment property to his UK-domiciled wife to ‘bank’ indexation allowance. If the property is now transferred back to the husband, will an inheritance tax liability arise?

I was reading Malcolm Finney’s recent article on excluded property (Don’t get trapped) and this reminded me of the reduced nil-rate band for transfers to non-domiciled spouses.

My clients are a UK-domiciled wife (A) and a non-domiciled husband (B). B has lived in the UK and been resident here ever since his marriage to A 15 years ago.

B owned an investment property in the UK which he purchased when he came to the UK and lived in himself for a short period prior to his marriage. When he learned that capital gains tax indexation relief was due to be abolished he executed a deed stating that he now held the property on behalf of A. The plan was that A would subsequently transfer the property back to B thus hopefully crystallising the indexation allowance.

Whether that works or not is a relatively minor...

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