Capital Gains Tax Liability

PinkPanther_3

My father in law died in September 2009 with my husband as sole beneficiary to his estate

We completed an IHT205 at the time and the total value of the estate was well under the 325K ( main asset being the house, valued around £150K)

Apart from the house there were various bank accounts and stock and share accounts all of which have been passed over to my husband in his name, nothing sold from this.

The house was finally sold in Sept of 2010 for £155K ( estate agents fees etc deducted for around £3000) off this

Am I correct in thinking we do not have a Capital Gains Tax Liability. My thinking being that we completed an IHT with the house value of £150K and then sold it for just £5000 more than this

I believe there is an allowance in the year that you are administering an estate of £10,100

The only other thing I wanted to check is that we now have the cash and other shares etc in my husbands name. This is earning interest ( not that much, but probably around £4-5k interest plus a year at current rates, some of which is re-invested in the original fund).

Is it just the interest which is treated as additional income for my husband and this should be declared of course. He is a standard rate tax payer and he is receiving interest after tax deducted at standard rate, but depending upon how much interest is paid out it could push him into Higher Rate Tax.

Hoping someone can help with advice please.

Many thanks

pjcox2005

From the details provided, you would have a small chargeable gain of £2k (155k sale, less original cost £150k, less incidental costs of selling £3k). However, as you noted you have a allowance each year of £10,100 so assuming you've made no other capital gains then no tax will be due.

On the shares, cash etc you will just need to declare interest and dividends for each tax year and be taxed accordingly on that (banks would normally deduct tax at the lower income tax rate already). Should the shares ever be sold at an increased value then you will need to consider at that point whether you have a capital gains tax liability.

00ec25

PinkPanther wrote: »

The only other thing I wanted to check is that we now have the cash and other shares etc in my husbands name. This is earning interest ( not that much, but probably around £4-5k interest plus a year at current rates, some of which is re-invested in the original fund).

Is it just the interest which is treated as additional income for my husband and this should be declared of course. He is a standard rate tax payer and he is receiving interest after tax deducted at standard rate, but depending upon how much interest is paid out it could push him into Higher Rate Tax.

as said you have no CGT liability however because you sold an asset for more than £40,400 (X4 your personal allowance) you are required to notify HMRC of this, you cannot not tell them just because you know you do not owe any tax, they still have to be told

on Income Tax remember it is not the actual amount you receive into your bank account which matters, it is the gross value befroe tax/credits which must be used, so if your £4,000 value is the net amount you received then you must gross it up in your calculation. You also do the same with any dividends you get (not clear if you get dividends as well as interest)

assuming husband is on standard 647 tax code in 10/11 then he will have to pay 40% higher rate tax on the amount in excess of:
in 2010/11: total income >£43,875
in 2011/12: total income >£42,475

Jenniefour

I think you may also be asking if capital gains tax is due on the total inheritance on the day(s) your husband received it and at the value it was then. The anwser to that is no - only inheritance tax is applied to the estate itself, if the estate is worth enough to be laible for this particular tax. This then becomes a sum of money/shares that your husband can use to make more money. Then normal tax applies, income tax and so on including capital gains if he exceeds the annual allowance on all his investments, whether or not they were his before or came from the estate of his late father. Hope that helps !