Capital gains on gifted boat?

[Durbin]

Hi all.

If someone were to gift me a narrowboat (it's a long story), do you know the capital gains tax situation for the gifter and the giftee?

I've read that boats may be a "wasting asset" and free from capital gains. 

If that is the case I'm assuming it would be as simple as just singing it over.

Just trying to get some clarification.

Thanks

[stegra]

I don't think it's capital gains that would be an issue. There are limits on the value of gifts that can be transferred within a financial year aimed at preventing the avoidance of tax on such things as capital gains or inheritance. I can't help with specific amounts but I'm sure they are easy to find with a little help from Google.

[Laurie Booth]

17 minutes ago, Durbin said:

Hi all.

If someone were to gift me a narrowboat (it's a long story), do you know the capital gains tax situation for the gifter and the giftee?

I've read that boats may be a "wasting asset" and free from capital gains. 

If that is the case I'm assuming it would be as simple as just singing it over.

Just trying to get some clarification.

Thanks

Just buy the boat for £10, or win it in a game of cards.

[Phil.]

If someone were to gift you a boat there is no tax to pay at all at that time. If it is of relatively high value, and the person giving it away was to die within seven years, then maybe the value of it will need to be included in their estate for inheritance tax purposes, but to be honest even this is unlikely to attract the attention of the taxman and so therefore it is highly unlikely that you will have to pay anything.

[nicknorman]

Capital gains tax arises when something gains value. So a narrowboat is unlikely to attrach such a tax since they don't tend to increase in value on their own. Perhaps you are thinking of a Potentially Exempt Transfer, which is an inheritance tax avoidance means. If someone gifts something, it becomes "potentially exempt" from their estate / inheritance tax. If the donor lives for a further 7 years, it becomes exempt. If the donor dies withing 7 years, it forms part of their estate for the purposes of inheritance tax. For the recipient, there is not tax to pay either way.

[Chewbacka]

I sorted my Dad's estate when he died and one of the HMRC rules is that gifts within 7 years (from memory) are liable for death duties, but on a sliding scale.  Just something to be aware off.

[Boat&Bikes]

I wouldnt take all the above replies as gospel. It's a little more complicated than some believe. Take expert advice.

Ian.

[Durbin]

Thanks all. I'll get some legal advice but it sounds like it shouldn't be too much of an issue. 

[Bewildered]

Do you even need to declare it as an asset? Does the taxman even know you own a boat? Why would you even tell the taxman, he's in your pocket for any and every other thing in life?

[mrsmelly]

4 minutes ago, Bewildered said:

Do you even need to declare it as an asset? Does the taxman even know you own a boat? Why would you even tell the taxman, he's in your pocket for any and every other thing in life?

I think you will find that CART inform HMRC of the names of peeps with boats. When my missus claimed her old fogies pension on the telefone ( very easy to do ) the young chap at the other end new who she was married to and precisely when my retirement date was etc etc etc, we are tied in together. The only way to legaly avoid paying tax is to become a Pikey 

[lulu fish]

49 minutes ago, mrsmelly said:

I think you will find that CART inform HMRC of the names of peeps with boats. 

No they don't.  CaRT don't even keep any records of who owns the boats on their system, only who licences them.

[mrsmelly]

Just now, lulu fish said:

No they don't.  CaRT don't even keep any records of who owns the boats on their system, only who licences them.

I stand corrected. Most people of course do not licence their own boats. I for instance licence fifty peoples boats for free who are forum members because I am nice like that. Suffice to say that HMRC have seen it all and are far and away cleverer than you or I and have far more means at their disposal to check us all out should they so wish.

[lulu fish]

1 hour ago, mrsmelly said:

I stand corrected. Most people of course do not licence their own boats. I for instance licence fifty peoples boats for free who are forum members because I am nice like that. Suffice to say that HMRC have seen it all and are far and away cleverer than you or I and have far more means at their disposal to check us all out should they so wish.

So do you have some evidence that CaRT tell HMRC every time a boat gets a new keeper?

(Mod edited - please don't resort to personal attacks.  This is already a useful thread, let's keep it that way - Dave_P)

 

[peterboat]

The tax man is linked into ebay and various other stuff, the next door neighbour is a HEO with them he smiles when people are talking about how little they know but keeps quiet. I would be tempted to sell it for a low sum putting on the receipt requires a renovation should help sort it out

[mrsmelly]

27 minutes ago, lulu fish said:

No need to be a dick.  So do you have some evidence that CaRT tell HMRC every time a boat gets a new keeper or were you just talking out of your arse?

BW always stated in their paperwork that they informed the government re who licenced boats as part of their money laundering legislation. I havnt checked but I just expected CART do the same.

[MtB]

On 26/06/2017 at 13:32, lulu fish said:

No need to be a dick.  So do you have some evidence that CaRT tell HMRC every time a boat gets a new keeper or were you just talking out of your arse?

 

No need to be so unpleasant about it. 

The forum has been quite civilised recently. Don't drag it back down.

[Chewbacka]

54 minutes ago, mrsmelly said:

BW always stated in their paperwork that they informed the government re who licenced boats as part of their money laundering legislation. I havnt checked but I just expected CART do the same.

Does that mean the shop will tell HMRC when I buy a new washing machine 

[magpie patrick]

1 hour ago, mrsmelly said:

BW always stated in their paperwork that they informed the government re who licenced boats as part of their money laundering legislation. I havnt checked but I just expected CART do the same.

I think the point is though that licensing a boat is not proof of ownership, it makes you liable for the boat in the eyes of the navigation authority but not necessarily the owner of the asset.

Example 1, sponsored boats in hire fleet, belong to sponsor but licensed by hire fleet

Example 2, private boat boat with a loan secured on the boat, licensed by "owner" but actually belongs to the bank

When I bought Ripple it was particularly complicated, she had been in a hire fleet as a sponsored boat, the sponsor had taken out finance for this so I was actually buying the boat off the finance company.

[mark99]

Most taxmen would burst out laughing then comiserate with you for acquiring a bloody expensive chattel.

[The Grumpy Triker]

On 24/06/2017 at 22:51, Laurie.Booth said:

Just buy the boat for £10, or win it in a game of cards.

Good advice on the purchase - from my own personal awareness Contract of Law states that the price must be reasonable - but law does not determine reasonable.....easy to check in a cost less chat to a friendly lawyer in a pub 

Buy it for £1 - this is reasonable given any number of circumstances - it doesn't have to be value for money or market value.... just reasonable.

....phone a friend for certain but don't do it for free!

[Laurie Booth]

4 hours ago, The Grumpy Triker said:

Good advice on the purchase - from my own personal awareness Contract of Law states that the price must be reasonable - but law does not determine reasonable.....easy to check in a cost less chat to a friendly lawyer in a pub 

Buy it for £1 - this is reasonable given any number of circumstances - it doesn't have to be value for money or market value.... just reasonable.

....phone a friend for certain but don't do it for free!

A friend of mine "Bought" a house worth £100k for £500. Plus legal fees.

[MtB]

On 27/06/2017 at 00:06, Laurie.Booth said:

A friend of mine "Bought" a house worth £100k for £500. Plus legal fees.

Now that WILL render him liable to CGT on disposal.

Unless he uses it as his PPR in the interim, of course

[Laurie Booth]

10 minutes ago, Mike the Boilerman said:

Now that WILL render him liable to CGT on disposal.

Unless he uses it as his PPR in the interim, of course

Yes he lived in it.

[Richard10002]

Not sure what all the fuss is about here. CGT only becomes an issue if it is sold later for more than it was worth when it was gifted - unlikely. And then, tax is only due if all your gains are more than your allowance.

If the donor dies within 7 years it's the estates responsibility to declare and pay inheritance tax if liable.

People give things away all the time and we don't all go running for expensive legal advice every time.

[Alan de Enfield]

3 minutes ago, Richard10002 said:

CGT only becomes an issue if it is sold later for more than it was worth when it was gifted

Indeed, and ideally you want it to have as high a value when gifted as possible, to ensure that if the value does rise you still have no CGT liability.

If you buy it for £1 and sell it for £30,001 you potentially (if in fact it is subject to CGT - speak to your accountant) have a liability of CGT on £30,000