volvoman
ianal either.
suggestions to make your wife legal owner:
either give cash gift paid to her bank account, draw up legal document to prove that you have gifted her the money. let her buy it with her personal cheque. register the car in your name or hers as v5 is not document of title.
or pay with your personal cheque, draw up legal document to gift the car to her. register the car in your name or hers as v5 is not document of title.
points to consider: how much inheritance tax would she have to pay if this scheme was ineffective? is it so much as to worry about? if yes then definitely take mitigating action.
car insurance is not a problem if posts above are fact.
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<< ... car insurance is not a problem ... >>
Not a problem when dealing over the phone, but many (most?) online insurance brokers have small print saying "The vehicle is owned and registered by yourself". That was copied from Direct Line's web site, but I've seen similar on many others.
Ian
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My understanding the last time I checked this was that the 55k is a lifetime limit. I am not aware of any subsequent changes to this. I suggest you check with your tax adviser/lawyer.
Giving a car which reduces in value is accordingly a waste of your 55k. You should be looking for assets which will increase in value.
You ask, how can this be checked? Well, your executor has to sign a tax return confirming the IHT calculation. Do you want him to perjure himself when he does this? It's a bit like saying how will the insurance company find out if I lie 'undetectably': is the risk worth it?
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I dont know if i can help but as an IFA i hope i can.
The whole deteriation of value thing doesnt matter. Its a private motor vehicle and therefore is not liable to CGT.
Also you wont pay IHT on death for assets transferred between spouses. Therefore its pretty pointless putting the car in your wifes names as you are not liable to any taxes on it.
If you're wife is non domocile then there are issues, but still fairly rare chance of paying tax.
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Slightly tangential, but: I go to buy a used car from a private seller, I hand over the cash, he gives me a receipt, the V5 gets sent off and comes back to me all in order...
What IS the document which says I OWN the car? Or indeed that the chap to whom I gave the money OWNED it?
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Right - thanks all. I've just checked with the capital taxes office and the 7 year limit applies even if the spouse is deemed non-uk domiciled so the good news for my lovely young wife is that I get to give her loads of money ASAP. The bad news is though, that she has to make sure I don't snuff it in the next 7 years if she wants to be sure of keeping all/most of it :)
The decision about UK domicility is a problem for anyone who's married to a foreigner and if anyone's not sure by how much consider the following:
How much is your total estate worth, then take £263k off (which could be left to kids for example). Next take up to a further £55k off if that was gifted to the partner more than 7 years previously. The figure you are left with (which could have passed entirely to a UK domiciled spouse) will be
taxed at 40% if the Capital Taxes Office deem he/she is non-UK domiciled and that could well be an awful lot of money!!
Anyway, the best advice I've had (Mapmaker?) was why on earth gift an asset which is decreasing in value? That was a really stupid idea and God knows why I even considered it! So once again, the BR comes to the resuce just in the nick of time and I owe all of you a pint.
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The bad news is though, that she has to make sure I don't snuff it in the next 7 years if she wants to be sure of keeping all/most of it :)
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or divorce you earlier ! ? :( ;)
The decision about UK domicility is a problem for anyone who's married to a foreigner and if anyone's not sure by how much consider the following:
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domicile - gordy broown has announced a review of the law.
also domicile can be of dependency, of origin, or of choice.
it can be affected by purchase of home or marriage to a native or by having no intention to return to previous domicile.
also you are deemed domiciled if you have lived in the uk after 9 december 1974.
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Hi Dalglish - yes I'd thought about "option 3" but why would anyone want to divorce someone as handsome, loving, kind, generous, understanding. .......... and modest as me ? :)
GB reviewing a law - that'll make a change. I expect it'll make things a lot better for us all - NOT.
Rules of domicile - as clear as mud as you've ably demonstrated. A cynic might say they were designed to allow the IR a degree of flexible 'interpretation' to suit the Exchequor.
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Most of the world spends its life trying to be NON-domiciled in order to benefit from not paying tax in the UK!
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Mapmaker - not sure if you saw my last post. It explains our situation better and may indicate why I'm worried about the IHT situation. As I said, I really would like to contact you direct though as this is non-motoring.
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Oh, and BTW - you're right about the perjury aspect Mapmaker and I know this since my first wife died intestate and I handled the probate process from start to finish. Thanks again for all your input.
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Volvoman.
No problem -- it's the sort of obvious issue that isn't obvious at all.
I think you're still not quite right, however. Obviously I cannot comment on your specific case, so what I write may not apply to your own circumstances, and I do suggest that you should talk to an accountant for clarification (or the CTO maybe).
The 55k is a once for all lifetime exemption. [It is an EXEMPTION by virtue of s18 IHTA, not a potential exemption, and s18 is very clear that it is a lifetime total of 55k.]
Beyond 55k, one can make a gift to ones non-dom wife, much as one could make a gift to anybody else (milkman, RX8 owner, son, daughter etc.), which would be a _potentially_ exempt transfer ('PET'). After 7 years this falls out of the IHT net, and has become exempt.
One can of course make lots and lots of PETs. but surviving 7 years doesn't then give one another 55k of exempt capacity.
However, on death, even if one lives 100 more years, she has still been given the 55k. So one cannot have that 55k tax free again.
There are all sorts of potential benefits through having a non-dom wife. I don't know how wealthy you are as to what extent it might be worth talking to an accountant to implement a complicated tax saving idea. It might be possible for instance (don't even think of doing this yourself, as it might not work and there is all sorts of anti-avoidance legislation that might catch you if it's not implemented properly) for your wife to borrow money from a foreign bank, and invest in shares. When she sells them, the capital gain might be tax free. So what? Well, she is able to borrow from the bank because you have guaranteed the bank loan by placing funds on deposit at a London bank. Therefore the gain on an investment that YOU would have made and been taxed on, becomes instead an investment that SHE has made and is not taxed on.
But are you certain that she is non-dom? Since 1974 she no longer inevitably becomes UK dom as a result of marriage to a you.
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I don't know if I made myself clear. This example might help.
Give her 70k today. First 55k tax free. You have to live 7 years until 23/3/11 in order for next 15k to be exempt.
Give her 80k tomorrow, you have to live until 24/3/11 for this to be exempt.
Give her 70k in 2013. You have to live until 2020 for this to be exempt.
Die and leave it all to her. No 55k exemption.
What you can do (and you can do this for anybody who isn't a UK-dom spouse, e.g. children/grand children) is to make gifts out of income. So if you earn 200k pa, and only spend 150k, you could give her 50k pa totally without worry. Again you would need to be careful of your record keeping so that your executors would be happy. Often an easy solution is to allocate your entire state pension to her. Or all the income from your BP shares. Then it is clearly income that you are giving away.
(This is why there isn't an IHT consequence each time you take her out for dinner - unless you're using up your capital savings.)
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Thanks so much Mapmaker, what you so does seem logical.
To summarise our situation, my earned income is very low but I own the house and we live on my investment income/ capital. My wife doesn't work and has few assets of her own.
So, I can give her up to £55k with no IHT. After this has been gifted we have to wait 7 years from the date of any further gifts for them to become IHT exempt.
When I die - if she's deemed UK dom. there's no problem. I can leave, say, cash to the value of the IHT threshold to my kids, she gets the rest with no IHT and keeps all the previous gifts.
If however she's deemed non-UK dom. she'd keep the £55k plus any gifts more than 7 years old. The kids get their legacy (for example up to the then current IHT threshold) and the rest goes to her but she has to pay 40% tax (currently) on it and any gifts from me which are less than 7 years old.
I'm conscious of not antagonising our hosts but would really appreciate your further feedback so, if the Mods. won't allow this thread to continue I'd be happy to send you an e.mail via them and you could get back to me.
Thanks once again.
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This wretched site destroyed what I'd written!
I'm beginning to get beyond what I know about. I recommend you go to www.tax.org.uk and click on 'find a cta' and then go to somebody who can give you specific advice for your specific circumstances. But I doubt very much that your wife is non-dom and recommend you find out the answer.
Go to the inland revenue website www.inlandrevenue.gov.uk/ as it is full of useful information that is very well written. First read the bits on domicile in
www.inlandrevenue.gov.uk/pdfs/iht18.htm
Then from the homepage, click on 'practitioner zone', and then 'manuals' in the bottom right hand corner. There is an excellent search facility. The manuals are the information source used by the Inland Revenue's tax Inspectors, and are well written. Read the whole chapter on domicile in the residence manual.
Be careful by the way of the difference between domicile and 'deemed domicile' - which is a specific term that I don't think you meant!
You can change your domicile by moving permanently to a country. What will your wife do after you die - go home or stay here? Where will she be buried? Does she retain membership of clubs in her home country? If the answers are 'UK', 'UK' and 'no' then she has probably already become UK dom, and all this fuss is for nothing! (Go and pay a tax adviser to confirm this situation with your own fact pattern. 200-400 pounds will be well worth it for peace of mind.) It's quite difficult to be married to somebody and live with them and not acquire their domicile. This is 'actual' domicle, not 'deemed domicile'.
'deemed domicile' happens when somebody is UK resident for 17 years out of a 20 year period. Following this they have to pay UK IHT on worldwide assets. You would have to check with your tax adviser whether you would be able to gift to a deemed domiciled spouse without IHT issues, but I doubt it - and anyway that is 20 years away.
Is there any reason why you want her to be non-dom? does she have vast quantities of foreign source income that she does not want to be taxed in the UK until she brings it to the UK to spend it? If this is the case, I hope you are making certain that she is still non-dom.
Brutally frankly, you don't sound wealthy enough to have a home in Monaco or Jersey. I doubt your wife is really non-dom, I doubt there is any benefit to her being non-dom, I doubt the Inland Revenue would agree not to tax any foreign source income she has.
And the motoring link is to make sure that if you do give her a UK car; given that to be non-dom she should probably go back 'home' after your death; make sure that you married somebody from a place where they drive on the left side of the road!
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If you nice chaps who run this place want to delete my ramblings, please be so kind as to pass my email to Mr Volvoman.
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The one reason to do this is if you divorce or separate, other than that it is considered jointly owned. If you go abroad on your own for any length of time or stay there away from your husband/wife , it would be a big problem if registered in your spouse's name.
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I would think that the OP's problem has been sorted out by now, that thread is 15 years old.
Is this a record for thread revival?
Edited by focussed on 22/10/2019 at 22:45
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It seems the thread related to an undue concern anyway. Volvoman cam back as "Mazda-Man" and was around until at least 2015, by which time his (wife's) new Mazda would have been getting on a bit.
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