Boost to Inheritance Tax Receipts

From: The Will Company

A mobile home is a tricky area under succession law and this article is only designed to take quick glance into dispensing of a mobile home by the Will; being that they are markedly distinct from what we may deem as more traditional property of bricks and mortar affixed to land.

What do we mean by ‘mobile’ home? When referring to mobile homes, what we are expressing is residential assets that can be moved or being moved; better described as property that can be moved from a plot of land without causing damage to the structure as set out in Caddick and another v Whitsand Bay Holiday Park Ltd [2015] UKUT 63 (LC).

So, considering this, how do we distinguish a mobile residence from a mere chattel under Section 55(1)(x) of the Administration of Estates Act 1925 and have it deemed as a home?

How do ‘mobile’ homes qualify as a dwelling-house/residence?

This is where we will want to look just outside the remit of HMRC’s IHT guidance and instead at their Capital Gains Tax guidance seen in HMRC Manual CG64325:

  • Where a caravan has become so affixed to the land as to become part of it, it will have ceased to be a chattel and so any gain will not be exempt (…from CGT). However, in these circumstances it may be that the caravan would be regarded as a dwelling-house and as such private residence relief may be available.

Looking at this example they refer to caravans, but the principle of becoming reasonably affixed to the land but one where it would be possible under the Caddick Case mentioned earlier for them to be disconnected and moved without the causing of damage to the structure.

What does this mean?

It means that a mobile chattel being used to live in is deemed as a dwelling-house/residence where it is reasonably affixed to a portion of land; being able to benefit from telephone, electrical and water mains etc, but is equally capable of disconnecting from said portion of land and relocating without damage.

Now, the practical questions:

Do they qualify for RNRB?

As we have established, moveable property falls into the category of being a chattel by its nature as a moveable asset. So surely it can’t be deemed as a Qualifying Residential Interest under HMRC’s guidance for RNRB?

In fact, it can qualify for tax relief, it needs to be deemed as a dwelling house as we have previously established, though HMRC’s IHT Manual does provide specific guidance to applying RNRB to a “dwelling-house” as seen here:

  • Whilst the definition of ‘dwelling-house’ clearly includes a building of the fixed bricks-and-mortar type of property, where an asset, such as a static caravan or a houseboat, has demonstrably been used as an individual’s residence you can accept it as being a dwelling-house for the purposes of the residence nil-rate band. Each case will depend on its facts.

So, while we can see that RNRB is available for a lot of dwelling properties where there is a Qualifying Residential Interest, it does not act as a blanket cover for all variations of mobile residence. If one were to live out of a camper van that regularly travelled, failing the requirements for it to be deemed as a dwelling-house, it would likely not qualify as a residence despite it being used effectively as a mobile home.

Can I gift my Mobile Home or place it in a Trust for my partner/spouse?

This is where the law surrounding mobile homes can become quite complex, and we are unable to break down the finer details surrounding how the different pieces of legislation may interact with one another in this article alone; our focus will primarily be in the context of the Mobile Homes Act 1983 and 2013.

A key distinction you may recognise is that a mobile home is by its nature, not an interest in land but instead is an interest in a chattel/fixture upon that land and thus is not gifted or placed into trust as you normally might. However, these chattels/fixtures can still be owned similarly to that of an interest in land, such as Joint Tenants or Tenants in Common and are to be treated as such regarding severance.

There are already laws in place that allow for the protection of someone else’s interest in occupation of the property, an example of this is seen in Sections 3 and 3(B) of the Mobile Homes Act 1983 which allows for the surviving partner or spouse to have a right to reside in the property after the owner’s death, or any right to occupy the property being granted under the terms of a Will or intestacy of the deceased owner. Please note that there is the possibility that an agreement between the owner of the land and the testator may preclude such a transfer of rights to use the land to enjoy the chattel.

So, how do we make a gift or trust of the mobile home?

  1. Have it be deemed as a Dwelling-House.
  2. Check the agreement between the landowner and the testator, and see if there is the ability for the survivor to have a right to occupy.
  3. Understand if the interest in the mobile home is either Joint Tenancy or Tenants in Common (Joint ownership over chattels, not land)
  4. Provide provision for how this gift is to be distributed as one might separate it out as a specific gift which is not to be distributed in accordance with the testator’s other chattels.

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