Hi, I have a query about the capital rules for the over 60's. Client (married, both over 65, wife is disabled.)had a house worth £130,000 and some land adjoining it that he bought separately. (paid £16,000 for it a long time ago and doesn't know how much it is worth now.) He recently sold the house to move to a bungalow. the bungalow was £150,000 and he borrowed £10,000 each from his son and daughter to make up the rest. He is now giving the land to his son and daughter as re payment. this is being done through a solicitor, but the land doesn't seem to have been valued( at least he didn't know the value - my guess is that its worth more than £20,000.) my concern is about the effect on his pc. He has an assessed income period until 2010. does he need to notify the pension service of this? i'm concerned that it could be deprivation of capital. all suggestions welcome.

The deprivation of capital rules are a bit different for pension credit as there is an express provision in the regs (21(2) that you aren't treated as depriving yourself of capital if you use it to pay a debt, even if there is no pressure on you to pay. No idea what the rules would be about overpaying a debt. But of course deprivation issues only arise if becoming or remaining entitled to benefits is a reason for doing it. Also there is no upper capital limit for pension credit so even if the notional capital rules were to bite they might not be immediately disentitled by capital.

Do you have a friendly local estate agent or surveyor who could give you a rough idea of the value? It's going to depend a lot on any development potential - if it can't realistically be developed, its value may not be much.

Don't lose sight of inheritance tax and capital gains tax issues, the later if the land was not occupied as part og the dwelling. Probably not an issue.

I've since spoken to the client and he now tells me that he is thinking of putting the land in trust to his children. He also said that he paid £16000 for it 20 years ago so even if the land can't be developed it must be worth a lot more than that now

Legally speaking putting it into trust is the same as giving it away - it isn't yours any more.

How big is this land anyway and what was is sold as? Unlesss it's simply huge farmland, that kind of price sounds to me to have some sort of development value, but it's a very long time since I did any conveyancing and I no longer know what just plain land costs but around 20 years ago freehold farm land in Hampshire, purely for agriculture, was about £1000 an acre.

Agricultural land in this part of the world is going for up to £4000 an acre - with outline planning permission the average plot for one house starts around £40,000.....

Your client may be worth more than he thinks....reall needs to seek legal advice before giving anything away.

I've written to him now and advised him to get it valued then given him some options depending on the lands value. Apparently it has some fruit tress on it! he seems to have used it as extra garden space so i'm guessing its no more than a small field, but i'm not certain of that. hopefully his solicitor will advise him to value it as well.

....and as has been suggested earlier he must think about the capital gains tax implications as well......he could even have to think about the pre-owned assets tax rules....but that makes my head hurt