IS THIS THE FASTEST CONVEYANCE EVER?

We were Instructed on a Wednesday  after our client had viewed a residential  property earlier that  day. We completed the purchase of it that Friday so the client with his family moved in for the weekend- only three days from start to finish. Is that a record?

WILLS & PROBATE - URGENT- REVIEW ANY SURVIVORSHIP CLAUSE IN YOUR WILL

Any potential  Inheritance Tax advantage has been lost  following the recent introduction of the “transferable nil-rate band” (TNB). The nil-rate band, currently £325,000, is the tax-free allowance to which every individual's estate  is entitled. If a person’s estate is worth less than £325,000, no Inheritance Tax is payable. In the past there was a problem where all the estate passed to the surviving spouse on the first death. The allowance on the first death was left unused and on the second death the single allowance might not be sufficient to cover the value of the now combined estate. The TNB has overcome this problem by allowing any unused allowance on the first death to be transferred on  to the second death. Potentially, the allowance on the second death may now be doubled up to £650,000.

A survivorship clause common in many Wills can wreck this tax relief. For example, if a couple are both killed in a car accident and one (A) dies instantly and the other (B) dies a few days later then there may be a problem if A owns all or most of the assets e.g. if the house is in A’s sole name. Take a case where A owns all the assets worth £650,000 while B owns none and both have simple Wills leaving everything to each other and then to the children on the second death. If a survivorship clause is included the result would be that everything passes to the children on the death of A - but with an inheritance tax bill of £130,000. If there had been no survivorship clause then everything would have passed to the children on the death of B - but by virtue of the TNB and the extra £325,000 tax relief there would have been no inheritance tax to payl.
If your Will contains a survivorship clause then you may need to change it as a result.
Please note that where property is held by two owners as beneficial joint tenants, the property will pass to the surviving joint owner regardless of the terms of the deceased owner's Will. Any survivorship clause in that Will, will not apply to the joint property passing by survivorship.


WARNING- STAMP DUTY  LAND TAX AVOIDANCE SCHEMES

Not surprisingly, buyers are increasingly looking for ways to get out of paying tax at a higher rate when the purchase price exceeds the £500,000 threshold. Schemes are around which charge a high rate of commission and claim to be tax effective, which the Revenue will construe as a fraudulent. It is not unknown for people to try to contrive circumstances where liability might be overcome, although if made subject to Revenue scrutiny such routes are unlikely to prove successful. HMRC will identify specific schemes which, in its view, are not likely to deliver the tax savings advertised. Where HMRC see such schemes being used, subject to the particular facts, it will make a challenge and seek to ensure full payment of the right tax with the right due date. This could be very many years later (and not 9 months as some of the promoter's of the schemes claim is the cut-off date).

STAMP DUTY LAND TAX  and EXCHANGES

A change to the Stamp Duty Land Tax (SDLT) rules on exchanges of land was introduced in the Budget (clause 82 and Schedule 21 of the Finance Bill). This change came into effect on 24 March 2011. The change was made to stop the exploitation of the exchanges rules to avoid tax. Under the new rules, we expect generally no change to the tax due on innocuous transactions (other than as described in the separate guidance on VAT) and we give examples of this below.
Apportionment of consideration
Where an interest in land is given in exchange for a less valuable interest in land, the consideration given may need to be apportioned to determine the chargeable consideration given for the interest received. This apportionment has to be on a just and reasonable basis as is required by paragraph 4 of Schedule 4. If the more expensive interest is given partly in consideration for another interest and partly in respect of another matter (for example, making a gift or for the receipt of cash) then its value should be apportioned between the chargeable consideration for the interest acquired and the other matter.
Example:
Ahmed and Katrina decide to exchange their homes. Ahmed's is valued at £375,000, but Katrina's is valued at £400,000, so Ahmed gives Katrina £25,000 in cash as well. Ahmed pays tax on chargeable consideration of £400,000 since this is both the value of the interest he acquires and the amount of consideration he gives to acquire it. It is just and reasonable for Katrina to apportion the £400,000 market value of her house (i.e. the value of what she gave) under paragraph 4 as to £375,000 for the property and £25,000 for the cash received. The chargeable consideration is £375,000 for Katrina's acquisition - this is equal to both the value of the interest she acquired and the amount of apportioned consideration she gave to acquire it. There is unlikely to be any element of gift in any transaction which has a commercial flavour

RESIDENTIAL LEASE EXTENSIONS

We are  very active  in this field with clients wishing to enhance the value of their leasehold interest. Please remember it is imperative an application for a lease extension is served on the landlord before the lease has fewer that 80 years to run as it becomes much more expensive after this.

LANDLORD' S UNREASONABLE ADMINISTRATION CHARGES

All residential leaseholders should have a right to challenge these. If  your landlord is asking for unreasonable costs, please  let us advise you  on how to respond.

RJS- Residential  & Commercial Property Department


Contact
property@londonrjs.co.uk