Is There Hidden Value In This Study (Avery Associates)
A chattel is a personal possession that you own and you can touch. You could take it with you when you go somewhere else. Therefore it follows you should be able to sell it, or give to someone so it becomes their own. However, there are times when you should not give a chattel away, or at least think twice before you do:
A Summary of What Follows
You Have to Own a Chattel To Give It Away
Tax Relief When You Donate To a Charity
Giving a Chattel Within Inheritance Tax Rules
Clearing Your Chattels When Downsizing
You Have to Own a Chattel To Give It Away
A chattel can be anything from a paper clip to a priceless old painting. However, you have to fully own it before you can legally give it away. Here’s a handy checklist:
- You must own the possession entirely. If you only have a share in it, then you must ask the other owners first. If you borrowed money to purchase it, you must settle the loan before you give it away.
- You cannot donate a chattel if someone has a security interest over it. You may have pledged it as collateral for a loan, and so you need to get the lender’s agreement.
- You should not give a chattel away if there is a legal issue around it. There may be a dispute or court order over it. The police may need it as evidence in an investigation.
- A court could reverse a gift if the donor is insolvent or about to become bankrupt. The creditors have an interest in their possessions, and may have first right over your gift.
You may like to record a gift in writing, if it is controversial or valuable. This is further proof that you gave the chattel away, intentionally and unconditionally.
Tax Relief When You Donate To Charities
You should not give a chattel away directly to a charity or community amateur sports club, if you want tax relief. However, if you sell the item first, then you could donate the proceeds and reduce your personal taxable income.
Here’s how it works in broad terms:
- Gift Aid is a UK tax incentive that enables tax effective giving to approved organisations.
- Choose a charity or community amateur sports club that is registered for Gift Aid benefits.
- The charity or community amateur sports club will ask you to sign a declaration.
- This will allow them to claim an extra 25p for every £1 you give. This will not cost you anything.
- Keep a record of your donation so you can deduct the value off your total taxable income.
Giving a Chattel Within Inheritance Tax Rules
There is no donations tax in the UK. However, the government does levy inheritance tax on some gifts and donations made within seven years of the donor passing. The actual impact on the deceased estate depends on the timing, the value of the gift, who gets the gift, and their relationship to the giver.
Spouses and legally registered partners living in the UK permanently, can give each other as much value as they like during their lifetimes. Gifts to charities and political parties are also exempt.
You should not give chattels away without being aware that any other gifts may trigger inheritance tax, within the ensuing seven years.
Here’s how the system works:
- You can give a gift, or several gifts each tax year, up to a total of £3,000.
- That allowance, or part of it, can carry forward but only until the next tax year.
- There are other exceptions too numerous to list. Follow this link to learn more.
Gifts made more than seven years before the giver’s passing are exempt. Those made more recently may incur inheritance tax, beyond the total threshold value of £325,000. This is how the government assesses the inheritance tax on gifts:
- Gifts given in the 3 years before death incur 40% inheritance tax.
- Thereafter the rate sheds 8% a year to zero after four more years.
A gift can be almost anything that you own, provided you are legally allowed to give it. If you sell something below value, e.g. your house to your child, then the discount is a gift.
Clearing Your Chattels When Downsizing
We wrote this article based on loads of experience working with probate attorneys, deceased estate executors, and private individuals for many years. If you are downsizing your home, or clearing one completely, then you may be interested in Avery Associates offerings in Greater London and beyond. These include:
- Clearing homes completely and legally disposing of unwanted items.
- Valuing and possibly selling valuable possessions on your behalf.
- Surveying / valuing land and buildings using registered professionals.
Please call Jeffrey Avery on 0208 640 00 44 / freephone 0800 567 7769, or email him at this address. We promise our very best service and friendly attention at all times.
More Valuable Information
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Clearing a Hoarded House Professionally
I have used Avery Associates both personally and professionally for a range of services, including house clearances, and probate valuations for over a decade. I have always found their services to be professional and good value for money.
They are organised, friendly and accommodating with the experience to offer the best advice to assist me in obtaining the best results. Jeffrey and his team really are second to none. Shar Gabore
