From a tax point of view, mum has made a Pet for IHT purposes and if she survives for seven years the full value of the home falls out of account as long as she continues to pay rent for her occupation. 

Note, however, that there will be no CGT uplift in the base cost of the home on mum’s death as she does not own it at that time. So, if the property increases in value in the period from the date of the gift to the date it is sold after mum dies, the son will pay CGT (currently at a rate of 24 per cent) on the gain.  

As mum is paying a market rent to her son, he will pay income tax on it, the rate depending on his other taxable income. He will also pay an stamp duty land tax surcharge of 3 per cent if he decides to move, himself, as he now owns two properties.

If, instead, mum gifts a share of the property to the son and they live together the Grob rules may not apply, but care needs to be taken in connection with the continued use and occupation by the co-owners and the payment of running costs.

This is an arrangement that HMRC is likely to scrutinise after the death of the donor, and expert advice needs to be taken.

Time is tight if gifts are to be made to beat the Budget, and we can expect HMRC to take a keen interest in gifting arrangements.

Judith Millar is a partner in the private wealth team at the law firm BDB Pitmans