An 89-year-old car enthusiast is exploring ways to prevent his children from facing a large inheritance tax (IHT) bill on his vintage Bentley, which has appreciated significantly in value. Terry Mackintosh bought the 1920s Bentley in 1959 for £260, and it is now worth at least £250,000. He still drives the car but is considering placing it in a trust to mitigate tax liabilities.
Under current IHT rules, gifts must be made seven years before death to be tax-free. If the donor dies within three years, the gift is taxed at 40%; between three and seven years, taper relief applies at rates from 8% to 32%. Although the car's value alone does not exceed the £325,000 nil-rate band, Terry's other assets will push his estate over the threshold.
Terry has four children but does not wish to gift the car directly, given his age. He is considering a family trust where his children would have power of attorney, and he would retain the right to drive the car until a new owner is found. He said: 'My children would become powers of attorney, and we could pass the ownership of the car into a trust with the proviso that I could remain as the sole driver until such time until we find a new owner.'
