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Daily Mail
08-08-2025
- Business
- Daily Mail
I have £30,000 in a Sharesave scheme: How can I avoid tax when I sell the company stock?
For the past three years I've been paying £500 per month into my company's Sharesave scheme which is due to finish in August. The option price is 30p per share but the shares are currently at 50p so I definitely plan to take the shares. However, the price can be volatile and I don't like having so many eggs in one basket - so I want immediately sell and put the money into ETFs in my stocks and shares Isa. I'm keen to avoid capital gains tax. Can you suggest the most tax efficient options to sell the shares and get them into mine and my partner's Isas? I understand there's a mechanism to get the shares into my Isa within 90 days of taking them and selling from there - but the shares are worth about £30,000, so above the £20,000 Isa allowance. Can I put some of them into the Isa up to my allowance and sell the rest outside of the Isa to minimise CGT? Could gifting some to my partner help? And given the relatively low value, can I achieve this without paying a financial advisor to sort it out for me? G.G, via email > How capital gains tax works: The rates you pay - and how to cut your bill This reader is worried about their potential capital gains tax liability as a result of the £30,000 in the Sharesave scheme Harvey Dorset, of This is Money, replies: Sharesave schemes, also knows as Save As You Earn, or SAYE, are programmes offered by employers that allow staff to buy shares in the company they work for at a fixed price. When the scheme matures, savers can either purchase the shares at the option price agreed at the start of the scheme, meaning they could gain shares at a discount, or can withdraw the cash. In your case, the value of the shares have increased by around 66 per cent from the option price, so taking these shares and selling them on could provide a healthy return. With £30,000 saved into the scheme, however, you are right that you could face CGT liability when selling your shares. Assuming your Isa allowance has not yet been touched this financial year, you will still only be able to move £20,000 worth of shares into the tax wrapper. That said, there may be ways to cut down any CGT bill, or even avoid it entirely when you do cash i. This is Money spoke to expert financial adviser Paul Crossan to find out what options might be open to you to slash a potential tax bill. Paul Crossan, senior financial planner at Hargreaves Lansdown, replies: Sharesave plans are an excellent way to build savings. They allow employees to buy company shares at a fixed price and include a valuable safety net, because if the share price falls below the set price, employees can still choose to take back their full savings as cash – usually with interest. That said, you are absolutely right to be cautious about 'having so many eggs in one basket'. Once the scheme has matured and you own the shares, the risk profile changes dramatically, from a situation where the worst outcome is getting your money back to one where you now own volatile, high-risk single company shares. Depending on the level of diversification you have within your broader portfolio, this may not be right for you. If you decide to diversify, you can still protect your investment from tax. You can transfer up to £20,000 of the proceeds from your Sharesave scheme into an Isa - or potentially a larger amount subject to individual contribution limits into a pension such as a Sipp within 90 days of maturity, without being subject to capital gains tax on the move. Once inside a tax–efficient wrapper, the shares can be held or sold without incurring CGT, and the proceeds can be reinvested into more diversified investments. If £18,000 has been saved over three years, your gain may be around £12,000. Using a £20,000 Isa allowance could shelter roughly two–thirds from CGT. If you decide not to use a pension, your £3,000 annual CGT exemption, if available, could help offset the remaining gain and if necessary, use the CGT annual allowance over subsequent tax years - although this may mean carrying the risk of holding the single stock for longer. In response to your query about gifting to a partner, HM Revenue and Customs generally allows shares to be gifted to a spouse or civil partner without triggering an immediate CGT charge. This could enable you to consider using their £3,000 annual CGT exemption. Consider their tax status, which may be lower than yours, before disposal. They would inherit your original option price of 30p per share as their base cost and may then face CGT on any future gains when selling. Once gifted as they are then the new owner of the money, they're free to decide what to do next, whether that's using the 'bed and Isa' process to fund their own Isa, make a pension contribution, or simply access the funds as they wish. Finally, you ask whether this can be done without advice. The simple answer is yes—many organisations, such as Hargreaves Lansdown, are equipped to support this process and your employer may already have a company it uses. However, if you are unsure about whether a particular investment wrapper such as an Isa or pension is suitable for your needs, it may be worth speaking to a financial adviser. An adviser will assess your wider financial situation, not just the Sharesave scheme, and help explore appropriate options in depth.
Daily Mail
10-07-2025
- Business
- Daily Mail
Can we put our children on our properties' deeds to avoid inheritance tax?
We are a retired couple and have two adult children, aged 45 and 30. Our home is worth around £350,000 and we also have a buy-to-let property valued at £250,000. Both are owned in our joint names as tenants in common. We also have investments worth £150,000. We wish to pass on the two properties to our children, giving them one each. We intend to do this by adding their name to each respective title deed as joint owners with us. When we both pass on, will our children be subjected to inheritance tax? U.P Harvey Dorset of This is Money replies: An increasing number of people are being dragged into paying inheritance tax as the allowance remains frozen and house prices gradually rise. Now, with pensions set to be included in IHT calculations from 2027, this will pull even more estates into the net. At the moment, your estate is not of the size that will make it liable for an inheritance tax charge - provided you are able to use your full allowances and also spousal transfer. This would mean you and your husband could, collectively, transfer up to £1million to your children tax-free. As discussed below, however, upcoming changes could affect this depending on the size of your pensions - and if they take you over that £1million mark. In your case, with an estate worth £750,000, your pensions would have to be worth more than £250,000 combined for this to happen. But avoiding this also isn't as simple as you placing your children's names on the title deeds of your properties. In fact, your situation could prove problematic further down the line if you don't handle it properly. To find out what you need to do to ensure your children aren't stung with inheritance tax, This is Money spoke to a financial adviser and solicitor, who share their responses below. Tom Garsed-Bennet, independent financial adviser at Flying Colours, replies: This is a common concern for our clients. Assuming you have no other assets, there is no IHT liability as your estate is valued at under £1million. However, if you have defined contribution or personal pensions, these will become part of your estate from 6 April 2027 and could tip it into IHT territory. As it stands, there appears to be no IHT benefit in adding your children's names to the property titles. It could even be a hinderance for tax planning if they were. This is because adding children to their parents' main residence property deed could trigger a 'gift with reservation of benefit' situation. In this case, His Majesty's Revenue and Customs could still treat the 'gift' - in this case a share of your home - as part of your estate, as you were still using it at no cost. The child who received a share of your main home would also be liable for capital gains tax on any gain in value on their share, as it would effectively be a second home. If you and your husband to retain your main residence in your names only, it would not be subject to CGT. The child that was put on the deeds of the buy-to-let property would be entitled to a proportion of the rental income as part-owner. They would also be subject to capital gains tax once the property was sold. If there is any concern around residential care fees eating into your estate in future, then a property protection trust might be a good option for you. This allows the 50 per cent share of the property to move into a trust on first death (of either yourself or your spouse). The remaining spouse can continue living in the property or move house (as they have a lifetime interest), but they only own 50 per cent themselves. This is normally written into your will and only becomes effective on the first death. This approach means that should the remaining spouse need residential care in future, only their half of the house can be accessed to pay for their care. The other half of the house is ring-fenced within a trust for the beneficiaries - your children in this case. I would always advise you to seek independent professional advice to guide you through this process, however, as IHT is a notoriously complex area. Help with financial advice and planning Financial planning can help you grow your wealth, sort your pension, or make sure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement and inheritance tax planning. If you are looking for help sorting your finances and want to work out whether you need advice, planning, or coaching, the following links can help you understand more: >Do you need financial planning or financial advice - and is it worth it? > Financial advice: What to ask and how much it might cost > Are you retirement ready? Take our quiz and get financial planning help > Inheritance tax planning - what you need to know to protect your wealth Joshua Ryan, principal associate at Weightmans LLP, replies: With tax and estate planning, the starting point is to take a step back to assess your assets holistically. This tends to lead to more planning options. The combined value of your estates is £750,000. Each individual has an inheritance tax-free allowance, which is known as the nil rate band. This allowance is currently set at £325,000, but is reduced by gifts made in the seven years prior to your death. Equally, if you leave residential property to a child or grandchild, and the value of your estate is beneath £2million, you can claim an additional allowance called the residence nil rate band allowance, which is valued at £175,000. The total value of both allowances is £500,000 per person, or £1million for a couple. Circling back, it would seem as though the value of your estates is within your available allowances and so you are not presently exposed to inheritance tax. Aside from preparing a tax-efficient will to ensure that the above allowances are retained in full, the best planning strategy would be to do nothing, for now, and to keep an eye on the value of your estates. With this being said, if the value of your estate exceeds the available inheritance tax-free threshold, you might want to take steps to reduce the size of your estate to reduce the inheritance tax payable on your deaths. This should be guided by professional tax and legal advice. There are many anti-avoidance rules and requirements that need to be carried out, and failure to follow these rules not only leads to unnecessary costs but also in many cases significantly increases the tax liability payable on your death. Key points to note when dealing with properties are as follows: 1. The UK has a principle that you cannot retain a benefit from an item gifted – this is known as the gift with reservation of benefit rule, and it means if you give something away you cannot continue to benefit from it. Therefore, simply adding your children's name to the title deeds will not work – you have not given the asset away, and so you will be liable to inheritance tax on the property. 2. Equally, certain allowances such as the residence nil rate band allowance rely on you owning your home or the proceeds of your home on death. If you gift your home then you do not own it – this reduces your available allowances, and I have seen many a case where inheritance tax is due as a result of the lost allowances. 3. There are steps that you can take to gift a share of the property to your children – but this planning is not straightforward, and needs careful consideration. There is more than one way to do this too: you can gift and rent back, you can gift a part of the property, or you can move your children in with you and gift. Each one has strict requirements so you need to ensure you abide by these, and to take professional tax and legal advice. 4. Finally, when gifting properties that are not your home then you risk generating a capital gains tax liability. The current capital gains tax rate is 24 per cent on the gain made. Equally, if you gift the property and do not reserve a benefit from it, then the value of the gift is classified as a potentially exempt transfer. You need to survive the date of the gift by seven years to avoid the value being amalgamated with the value of your estate on death. The worst case scenario is that you pay 24 per cent capital gains tax on the gain made by the property, and then 40 per cent inheritance tax on the value of the gift. In summary, there are options but these should be guided by professional tax and legal advice from a solicitor that advises on inheritance tax mitigation.
Daily Mail
18-06-2025
- Business
- Daily Mail
Can my mum pass her property portfolio to us without falling into an inheritance tax trap?
My father passed away 18 months ago unexpectedly. Thankfully he had a will which left his estate to mum. His estate contained predominately a portfolio of five rental properties of which three are mortgaged, the home that my mum lives in and a surplus of cash. My mum is retired now and uses a portion of the rental income to top up her pension and support her day to day living. My mum wants to structure things in a way which mitigates inheritance tax and capital gains tax as much as possible. I'm one of three brothers - one has health issues and doesn't work, the other is potentially emigrating and doesn't want to complicate things by owning a property outright in his name. What are our options? L.J, via email This reader's mother has five buy to let properties on top of her own home and cash savings Harvey Dorset, of This is Money, replies: This must be a difficult time for you and your family. It is good to hear your father did not pass away intestate, as a will undoubtedly makes the whole inheritance process slightly easier. As your mother wants to reduce the eventual inheritance tax bill now, it is good she is considering her options well in advance. Unfortunately, as you mention, there are complexities in your situation that mean it isn't as straightforward as your mother passing the whole estate directly to you and your brothers when she dies, especially given that there could be a hefty inheritance tax bill if she did given the size of the estate. As discussed below, there are options available to you to mitigate the IHT bill, especially if you take action sooner rather than later. This is Money spoke to two financial advisers to find out what you, and your mother, need to do in order to reduce your future tax bill. Aaron Banasik, independent financial adviser at Ascot Lloyd, replies: I'm sorry to hear about the loss of your father. It's reassuring he had a will in place, allowing your mother to inherit the estate smoothly. With a portfolio of five rental properties three mortgaged alongside her home and a cash surplus, your mother is rightly seeking to protect the estate from future inheritance tax and capital gains tax while supporting her retirement. Observing inheritance tax, it is charged at 40 per cent on estates over £325,000, although transfers between spouses are exempt. On your mother's eventual passing, the estate could benefit from an enhanced nil-rate band of up to £1million, provided the family home is left to direct descendants. She may consider gifting property during her lifetime, which, if she survives for seven years, could fall outside her estate for IHT. However, if she retains any benefit such as the rental income, then the gift may still be considered part of her estate. Furthermore, CGT may apply immediately on such transfers, and stamp duty could arise if debt is involved. Gains above the CGT allowance (£3,000 for 2025/26) would be taxed at 18 per cent or 28 per cent. Holding the properties until death eliminates CGT entirely, as assets passed on death are exempt from CGT. An alternative strategy could be to sell the properties gradually. This allows her to reinvest proceeds in IHT-efficient investments such as a discounted gift trust which can provide her with an immediate IHT discount whilst producing a regular income, however it's important to speak to an experienced independent adviser to provide guidance on this. Discretionary trusts can offer a way to transfer assets while retaining some control, though they could come with initial IHT charges and high-income tax rates on rental income. If structured correctly, trusts can help support family members, especially relevant with one son unable to work and another potentially relocating. Alternatively, whole of life protection written in trust can be used to cover the future IHT bill. Premiums may even qualify under the 'normal expenditure out of income' rule if her income is sufficient. Given the differing needs of your brothers, flexibility is vital. A mix of selective lifetime gifting, trust arrangements, and making use of your gifting allowances may allow for equitable wealth transfer without placing immediate obligations on them. Patrick Haines, chartered financial planner at Partners Wealth Management, replies: This is an important time for the family following their loss 18 months ago. Specific measures should now be put in place to ensure tax is mitigated. In addition, an assessment ought to be made in relation to your mother's ongoing vulnerability, just in case your father's passing impacts any decisions being made now. Deed of variation The first action which should be considered is a deed of variation (DoV) of your father's will. This enables the terms of the will to be altered post-death so long as all of the original beneficiaries are in agreement with the changes and that adjustments take place within two years of death. I recommend you then review the five rental properties with your mother and siblings (in terms of yield and values), to see which of these could be now placed in the names of her three sons. This can be actioned by a legal transfer of ownership once the DoV has been actioned. Potentially, you and your brother who is to remain in the UK could each receive a rental property, with a third property being sold to realise a cash sum for investment for your other brother who is due to move abroad. Advice should be taken for your non-working brother as any rental income now received could impact his receipt of state benefits (such as Personal Independent Payments etc.) Inheritance tax By removing these three rental properties from your mother's estate, this could save 40 per cent inheritance tax on these assets which would have otherwise become payable on your mother's eventual passing. The remaining two rental properties could continue to be owned by your mother with any rental income being enjoyed as a top-up to pensions etc. If any of the income is excess to requirements, this can be gifted outright to you and your brothers without any inheritance tax applying, so long as certain conditions are met. This will also ensure there are sufficient assets remaining within your mother's estate should future care costs need to be met. Depending on your mother's age and medical history, some of the excess income could also be used to fund a Whole of Life policy, written under trust. The sum assured would then be payable on your mother's passing and this could be used to meet some or all of the inheritance tax due. Any mortgage debt can be used to reduce the taxable value of the estate. A life policy is particularly useful where property is concerned as it can ensure that the two rental properties (and main residence) do no need to be sold immediately and can eventually pass to you and your brothers free from IHT. Help with financial advice and planning Financial planning can help you grow your wealth, sort your pension, or make sure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement and inheritance tax planning. If you are looking for help sorting your finances and want to work out whether you need advice, planning, or coaching, the following links can help you understand more: > Do you need financial planning or financial advice - and is it worth it? > Financial advice: What to ask and how much it might cost > Inheritance tax planning - what you need to know to protect your wealth Capital gains tax Assuming your father owned the five rental properties in his sole name, any capital gain will have been 're-based' on your father's passing. This has benefits in there will be no capital gains tax (CGT) due on the gain as gains die with the owner. The re-basing of the property values does need to be claimed so is not an automatic entitlement. Investment considerations If your brother does move abroad, the sale proceeds of his inherited rental property could be reinvested using an Offshore Bond which he can access when he is abroad if needed, whilst enjoying deferred tax on the fund in the UK. Advice should be sought at the time to ensure any withdrawals are not taxed by the authorities where your brother is residing when abroad. He should also consider making full use of his Isa allowance before leaving the UK. Wills and power of attorney It is important to ensure your mother's will is now reviewed following your father's passing as there may be elements of the existing will which are no longer relevant. Equally, your mother should ensure she has a power of attorney arranged in the event she loses capacity and is unable to manage her own affairs. This will save the family an awful lot of cost, administrative burden and stress at a difficult time. Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth.
Daily Mail
28-05-2025
- Business
- Daily Mail
I'm 80 and want to move in with my son and his family, will it create a tax trap?
My wife and I are 80. What are the tax implications and pitfalls, if we sell our house and buy another jointly with my son and his family in order to live together? What can we do to mitigate these? A.S, via email SCROLL DOWN TO ASK YOUR FINANCIAL PLANNING QUESTION Harvey Dorset, of This is Money, replies: Moving in with family can help people see enjoy their later years in comfort, with the help they need along the way from loved ones. Having grandparents on hand can also be a vital help for working parents too. Intergenerational living won't be without its tricky moments but it is a great way to spend precious years together as a family and see more of your grandchildren. It also allows families to pool their financial resources and potentially get a home, space or location, that they might not be able to alone. You are right to check up on the tax implications though, as this kind of joint ownership can have an impact on everything from stamp duty to inheritance tax. You don't state how much your existing home is worth or what the new one will cost. The financial advisers we spoke to explained this will make a difference to whether you need to worry about inheritance tax and how complicated things may be. Ian Dyall, head of estate planning at Evelyn Partners, replies: The two taxes you need to be aware of are inheritance tax and a form of income tax called 'pre-owned asset tax', which was introduced in 2005 as an anti-avoidance measure to target people who were managing to sidestep the inheritance tax rules. Let's talk about the principles of inheritance tax first and then we can apply it to your case. If you reduce the value of your estate by making an outright gift, that will only be effective in reducing your inheritance tax liability if there is no 'reservation of benefit'. You also generally need to survive the gift by seven years before it ceases to be included in your estate unless it is covered by one of the exemptions. A reservation of benefit occurs where you continue to use or benefit from an asset that you have given away, for example giving away a property but continuing to live in it. In your case, whether there is a deemed lifetime gift for inheritance tax will depend on who pays for the new property and how it is owned. If you take the proceeds of your current home and use it to help purchase the new property, but the property is owned solely by your son and his wife, then a gift has happened for inheritance tax purposes. However, if you then live in that property rent-free, it is likely to be treated as a reservation of benefit for inheritance tax purposes. The value would remain in your estate and will be liable to IHT on death, irrespective of how long you live after making the gift. If the new property is co-owned with your son in proportion to how much each of you have contributed, then there would be no gift and only your share of the property would be liable to inheritance tax on your death. If the property were solely owned by your son and his wife, you could avoid the reservation of benefit by paying a market rent for your use of part of the property. You would need to get a professional to determine a fair rental value of your use of part of the property, and your son would be liable to income tax on the rent, but in some cases that may be worth paying if you think you are likely to live seven years but not an excessive period beyond that. If you no longer own a share of a property on death, you may be worried that you will lose the 'residence nil rate band', which is an inheritance tax allowance that can be used if you leave your home to your children and grandchildren on death. However, 'downsizing provisions' exist to allow people to downsize or sell their home later in life without losing the allowance, so you should not lose any of the allowance that you would have been entitled to. Make sure you get ownership set up properly Patrick Haines, partner at Partners Wealth Management, replies: There should be no tax issues (other than potentially stamp duty) on the planned move to the new 'family home'. For inheritance tax purposes, you may have available a tax-free nil rate band each of up to £325,000 and an additional tax-free residence nil rate band each of up to £175,000 (certain conditions apply to the latter). This can provide a tax-free estate of up to £1million. Where your estate is valued within the above limit, there may potentially be no inheritance tax due on your estate on the last to die and your son and family could ordinarily live with you in the meantime without any tax implications. A properly drafted will should be arranged. For larger estates, inheritance tax is usually payable at 40 per cent on your estate in excess of these allowances. In this case, there are further considerations and these relate to how the property is legally owned from outset and also your life expectancy. To meet your objectives, the ownership of the property in this case could be arranged as tenants-in-common where you will typically own 50 per cent and your son would own the other 50 per cent. We would recommend an equivalent sharing of the running costs as well. You could then take advantage of a co-ownership discount, which HMRC permits where the co-owner is not a spouse or civil partner. Your son can remain in occupancy for a discount to apply. On the successful application following the death of the 50 per cent co-owners, a discount of up to 15 per cent of the value of the deceased's share can be applied. The other 50 per cent owners would continue to own their share. In our example, if you as parents pass away within seven years, the 50 per cent share you have given to your son on the purchase of the new property would fall back into your estate. Where the total estate value exceeds the available nil rate bands, then inheritance tax may be due on the excess. The gift to your son of the 50 per cent share is called a potentially exempt transfer (PET) and this gift will fall outside your estate for inheritance tax if you survive a seven-year period. For 'failed PETs' where the 50 per cent gift to your son is in excess of the available nil rate bands of £325,000 each, taper relief may apply to the excess which can reduce the tax payable. Be mindful that the inheritance tax on any failed gifts might need to be met by the beneficiaries. Inheritance tax on jointly owned property is rarely straightforward and whether or not tax has to be paid will depend on several factors, including the status of the person inheriting and their relationship with the deceased, how the property was jointly owned, the type of the property concerned and details of occupancy. Caution: tax planning around the main residence and joint property ownership can be fraught with danger, particularly where circumstances change or relationships deteriorate so professional legal advice from a qualified solicitor is strongly recommended. Help with financial advice and planning Financial planning can help you grow your wealth, sort your pension, or make sure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement and inheritance tax planning. If you are looking for help sorting your finances and want to work out whether you need advice, planning, or coaching, the following links can help you understand more: >Do you need financial planning or financial advice - and is it worth it? > Financial advice: What to ask and how much it might cost > Are you retirement ready? Take our quiz and get financial planning help > Inheritance tax planning - what you need to know to protect your wealth What is pre-owned asset tax? Ian Dyall adds: If you sell your property and give the cash to your son who uses the money to buy a property in his name, which you then live in, there is an argument that the reservation of benefit rules do not apply. In this case you could be liable to pre-owned asset tax. This is an income tax charge paid annually on the perceived value of your occupation of the property. You can avoid it by electing to have your contribution towards the property treated as a reservation of benefit, or again by paying a market rent. Its application is complex and it is easy to unwittingly fall within the scope of the tax through actions driven by motives unrelated to tax planning. The bulk of UK wealth is held in people's homes, so successive governments have made it difficult to mitigate the inheritance tax liability on your main residence, introducing new legislation to block loopholes when necessary. If your share of the new property is worth less than the proceeds from your existing home, then planning with the funds you have released by downsizing may be the simplest approach to mitigating inheritance tax. Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth.
Daily Mail
27-05-2025
- Business
- Daily Mail
Can the council make me sell my mother's bungalow to pay for care?
My mother currently is in an elderly mental health ward suffering with depression and anxiety. Her £150,000 bungalow in Port Talbot has been put into a trust since 2015 with myself as the beneficiary and my mother remaining as a tenant. Should the need arise, and she needs to go into something like a sheltered housing complex, could the local authority make me sell her bungalow to cover any care and housing costs? S.M, via email SCROLL DOWN TO ASK YOUR FINANCIAL PLANNING QUESTION Harvey Dorset, of This is Money, replies: Care is something that many of us don't consider earlier in life, meaning that if or when this need arises we may not be ready or able to fund it without making financial life altering decisions. As many as 66 per cent of care seekers are self-funding, according to 2024 data from Just 16 per cent of care seekers were able to access funding from their local authority. For those who live alone, there is a risk that means testing could see their home's value used to pay for care. There has been forethought on your mother's part to place her property into trust. However, depending on the circumstances of this, it could still be deemed that the property can be used to fund any care needed. As discussed below, this largely relates to the decisions made in 2015 and the reasons they were taken. Yours is a complex issue. This is Money spoke to two financial advisers to find out what your mother needing care might mean for her property held in trust. Natalie Donnell, independent financial adviser at Flying Colours, replies: I am sorry to hear about your mother's illness. Having looked at your question, I think the key issue as regards the bungalow is intent. By that, I mean what was the intention from your mother when she placed the property into a trust in 2015? This is because if your mother were eventually to need full-time care, the local authority would conduct a capital assessment to determine who is responsible for funding the care (i.e. self-funding or funded by the local authority). When it comes to long term or full-time care, if the value of your mothers' assets is more than £23,250 (in England – it varies in other parts of the UK), she will be responsible for funding her care needs. This is different from the current situation, where I would think your mother's care, in a mental health ward, is being funded by the NHS. Intent comes into this because if the local authority deems that the property was put into trust in 2015 to reduce assets and avoid the eventuality of paying for full-time care later down the line, they could consider this this to be a case of 'deliberate asset deprivation'. That would mean they could treat your mother as still owning the asset (known as notional capital). They could also refuse to fund care (or assess your mother's situation as though she still owned the asset). In some cases, they could take legal action to challenge the trust. Whether the trust holds under scrutiny depends on several factors such as whether the trust was created at a time when future care needs were foreseeable, and the structure and type of trust (i.e. discretionary, life interest etc.). Trusts are a notoriously complex area so I would advise you to seek specialist independent advice on the likelihood of the current arrangement falling foul of the 'deliberate asset deprivation' category, and if so, to see whether there is any action you could take to mitigate against this. Get your financial planning question answered Financial planning can help you grow your wealth and ensure your finances are as tax efficient as possible. A key driver for many people is investing for or in retirement, tax planning and inheritance. If you have a financial planning or advice question, our experts can help answer it. Email: financialplanning@ Please include as many details as possible in your question in order for us to respond in-depth. We will do our best to reply to your message in a forthcoming column, but we won't be able to answer everyone or correspond privately with readers. Nothing in the replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons. Adam Johnson, director at SJP partner practice New Forest Wealth Management, replies: The first consideration is whether your mother's care will be funded by the NHS (such as through NHS Continuing Healthcare) or subject to means-testing by the local authority. If her needs are deemed primarily health-related — for example, if she is sectioned under the Mental Health Act or qualifies for NHS Continuing Healthcare — the value of her property will be disregarded entirely, as the NHS covers all associated costs. If, however, the care is means-tested, the local authority will assess your mother's income, savings, and assets. If her savings exceed £23,250 and her income is insufficient to cover care costs, her home could be included in the financial assessment, depending on her living arrangements. Property use and living arrangements If your mother continues to live in the property or moves into another owned property (such as sheltered accommodation) and receives domiciliary care, the value of her home is typically ignored. However, if she moves into residential care and no longer lives in the property, the local authority may then consider the value of the home — unless it is exempt for another reason, such as a dependent still living there. Trust ownership and deprivation of assets As the home has been placed in trust, the key issue becomes whether your mother has any rights to the capital value. If the trust structure means she has no such rights — and only a right to reside, with the capital ultimately passing to you — she may no longer be considered to "own" the property for assessment purposes and therefore cannot be made to sell it. However, this leads to the question of deliberate deprivation of assets. If the local authority believes the home was placed in trust to avoid future care fees, they could treat her as though she still owns it. Their judgment will centre on why the transfer was made in 2015. Since the arrangement did not benefit inheritance tax planning (due to her continued occupation), they may question what financial objective was being addressed, and whether placing the property in trust was a proportionate response. There is no statutory time limit on how far back local authorities can look for evidence of deprivation. Although a transfer made 10 years ago may be less likely to be challenged, it cannot be ruled out. The outcome will ultimately depend on the local authority's interpretation of the facts and the strength of the explanation for the trust. I recommend reviewing the trust documents in detail.
