Pre-owned Asset Tax
Pre-owned asset tax was introduced in April 2005 to plug a perceived gap in the gift with reservation of benefit rules, which in turn came into existence to limit the tax planning which could successfully be undertaken using the inheritance tax rules.
The pre-owned asset tax is an income tax charge which is levied on the perceived benefit of using (free of charge) assets which either you used to own or that have been purchased from cash that you have given away or, in some circumstances, from the sale proceeds of another asset that you gave away.
The rules, although introduced in 2005, are retrospective and apply to a number of transactions that took place as far back as 1986. This caused outcry amongst professionals and the general public alike, to little effect.
Warners can advise on ways to avoid falling into the pre-owned asset tax trap when undertaking new, lifetime, tax planning. Warners can also assist in the mitigation of any pre-owned asset tax liability that may have inadvertently arisen as a result of previous actions.
- How to Reduce your Inheritance Tax Bill A combination of rising house prices and a freeze on the threshold at which estates pay inheritance tax means that many more households fall into the tax net than was once the case. Ruth Pannell, wills solicitor at Warners in Sevenoaks, advises how, with some simple planning, it is possible to keep your inheritance tax liability to a minimum...