Gifts with strings attached

06 Jun 2018

Most gifts made during a person's lifetime are not subject to tax at the time of the gift. The lifetime transfers are known as 'potentially exempt transfers' or 'PETs'. These gifts or transfers achieve their potential of becoming exempt from Inheritance Tax if the taxpayer survives for more than seven years after making the gift. There is a tapered relief available if the donor dies between three and seven years after the gift is made.

However, the rules are different if the person making the gift retains some 'enjoyment' of the gift made. This is usually the case where the donor does not want to give up control over the assets concerned. These gifts fall under the heading of 'Gifts With Reservation of Benefits rules' or 'GWROBs'.

A common example is where an elderly person gifts their home to their children (who usually live elsewhere) and continues to live in the house rent-free. Under these circumstances, HMRC would say that the basic position of the donor remained unchanged and that this is a GWROB. In this case the taxman will not accept that a true gift has been made and the 'gift' would remain subject to Inheritance Tax even if the taxpayer dies more than 7 years after the transfer.

Planning note

A GWROB can usually be avoided in this type of situation if the donor pays full market rent for the use of the asset gifted. We would be happy to help you understand what options are available to reduce your liability to Inheritance Tax whilst at the same time protecting your assets.

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Stratford Upon Avon

13, The Courtyard
Timothy's Bridge Road,
Stratford-Upon-Avon,
Warwickshire,
CV37 9NP
01789 294484

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Grenfell James Associates - The Senior Team

Chris works with a diverse profile of owner managed businesses to assist them to grow and retain wealth. Although Chris works with clients from a wide range of sectors, he has particular expertise in property, catering, consultancy and professional services.

Chris Wood

Managing Director ACMA

Alex has worked for Grenfell James since 2002 and became a director in 2013. Overseeing our internal operations, he manages the flow of work and ensures we hit our strict deadlines. Alex also manages a portfolio of clients, with expertise in manufacturing and service businesses.

 

Alex Enstone

Operational Director MAAT

David has worked for Grenfell James since 2006. He heads up our tax team and is highly experienced with expertise in different industries and sectors.

David Murphy

Tax Director ACCA

Hannah qualified in 2016, having worked for the company since 2009. She acts as a client manager for a range of businesses, with expert knowledge of the equestrian and rural sector. Hannah also manages our payroll team.

Hannah Watson

Client Manager ACCA

JP qualfied in 2014, having worked for Grenfell James since 2007. He is a client manager for a diverse portfolio of clients including those in the manufacturing and serivce industries. 

 

Jon-Paul Lawrence

Client Manager ACCA

"In the past we have been unfortunate to work with some less than reputable accountants. Grenfell James Associates have restored our faith in the accountancy business and assisted us with every aspect of our financial responsibilities. We now have a renewed confidence in our finances, knowing that all our affairs are being dealt with in an efficient and professional manner. Thank you to the whole team and we look forward to many years of working with you. "

NPD Design Consultants Ltd

"I think you do a great job. You are so approachable and flexible in terms of when you can meet us. "

Mckechnies independent tea and coffee bar.

"Since taking over the accounting for our two businesses, Grenfell James have taken away any stress we have had in the past with our accounts. They have been very approachable and easy to talk to, enabling us a better understanding of how we need to run our business. "

Paul Stanley. A S Contracts Ltd.

"We have used the services of Grenfell James since the inception of our business. They advised us strategically through the incorporation of our partnership and have taken over our payroll function, aswell as advising us on a continuous basis on accountancy and business matters. The team are incredibly friendly, knowledgeable and their advice is always excellent. "

IO Studios

"~After contacting various accountants about what seemed to be a complicated capital gains issue, I spoke with Damien.He is very approachable, professional and immediately reassured me that it was straightforward. He obviously had experience of the matter.I met him to give him my paperwork and I felt I had no need to worry.He completed the tax return very quickly and the cost was reasonable.I highly recommend Grenfell James Associates and Damien.   "

Mrs Jones

"Fantastic all round service level. Tax return peace of mind and highly efficient. Thank you. "

Mr J McCarthy

"For our cash hospitality business, prompt, accurate numbers matter, and the ability to call quickly for break-downs and analysis. GJ is always responsive and ready to be on the case. We never feel short-changed. "

Andrew Knight. The Howard Arms Ilmington

"“Grenfell James was instrumental in me setting up my business 10 years ago and Hannah Watson has been with me every step of the way since. Focusing on delivering my business means I don’t want to be worrying about my accounts, VAT and tax issues. Hannah and the team take all of that off my hands and pretty much act as my finance team, advising on everything from everyday payroll to international invoicing. I couldn’t have achieved what I have without them and value their personal attention highly - everyone in the team is extremely approachable and will take time to explain anything I need to know”.   "

Mary Keeley - Mary Keeley Consultancy

"Thank you Grenfell James for providing an excellent service for both me and Proco. Everything you have said and done has been spot on and on time. A great team and very friendly. Regards, from a very happy customer. "

Proco Coatings & Laminates

"I am delighted with the professional and efficient way in which Grenfell James Associates do things. In particular, they return my calls quickly, do the things they say they are going to do and do them when they say they are going to. Since our group was established in 1991 they developed all the financial systems that robustly stood the test of time, coping with many millions of pounds of transactions "

Regent Square Estates

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  • 13, The Courtyard
    Timothy's Bridge Road
    Stratford-Upon-Avon
    Warwickshire
    CV37 9NP
  • 01789 294484
  • 7-8 Stratford Place
    Mayfair
    London
    W1C 1AY

  • 0207 495 0304
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