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Legal case

Gifts between unmarried couples — guarding against unexpected tax consequences

An unusual case to set aside a lifetime gift serves as a reminder that unmarried couples are exposed to potential inheritance tax.


Tom Makin, the reputed “heir to the JD Sports empire”, tragically died from bone cancer at just 29, leaving behind a wife, Kirsty, and two young daughters.

Two years before his death and a year before getting married, Tom had put Kirsty on the title deeds transferring their home from his sole name into joint names. As this was a gift, a ‘potentially exempt transfer’, and Tom did not survive for seven years, there was a sizeable inheritance tax bill payable on the value transferred. Had he left the property to his wife through his will instead, it could have passed tax-free.

It is reported that the family are applying to the court to try to have the gift set aside on the grounds of “mistake”. This is presumably on the basis that the tax consequences had not been appreciated at the time the gift was made. 

Lessons learned

Early advice

It is a case to be followed with interest but does highlight the need to take advice before significant gifts are made. 

Tax considerations

A gift to a partner, as with gifts to children and grandchildren, always involves a potential capital gains tax bill if assets, as opposed to cash, are transferred. There is also the risk of an inheritance tax charge if there is an untimely death soon after the gift is made, even if the gift is cash. The nil rate band allowance of £325,000 may help, but the allowance is applied in chronological order and it may mean that there is less allowance available to the beneficiaries of the estate if the gift uses up the allowance beforehand.

Consider protective insurance

In certain circumstances it may be worth investigating the costs of a decreasing term assurance policy to cover the relevant period, but the cost of the premiums would then have to be factored in in determining the affordability of the gift. 

Transfers to joint names

It is important to stress, as in this case, that even transferring an asset or money into joint names amounts to a gift, as HMRC will ordinarily treat the asset transferred as held 50:50 by each partner.

For further information or guidance, contact our inheritance tax solicitors.

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