My wife has a buy-to-let (BTL) property. We want to gift it to our son. It was purchased for £60,000 and is worth about £120,000 (it generates £6,000 per annum gross). The suggestion is that she puts in our joint names and we initially gift our son say 40% (i.e. worth about £48,000) with a base cost of £24,000. We will each realise a gain of £12,000 each and hence use up our CGT allowance. We will gift another 40% in April next year and the balance in April 2021. There will be little or no CGT to pay and as long as we live seven years beyond April 2021 the gift will fall outside of our estates for inheritance tax purposes. Will this work? Will HMRC accept it? We will each report our share of the net rental income on our tax returns until the transfer is complete.

Arthur Weller replies:
Officially, HMRC object to what you are planning to do (see www.gov.uk/hmrc-internal-manuals/ capital-gains-manual/cg18150). But if you look at HMRC’s guidance you can see that HMRC recognise themselves that it is not easy to challenge the taxpayer on this. Furthermore, many people in this country do as you are planning. Many tax advisers, perhaps most tax advisers, would not hesitate to advise as you are planning. Another relevant point; perhaps it is worth getting an independent valuation of the property, because maybe you can get a valuation for less than £120,000.