R27 Capital Gains Tax question

Peanut_butter_2

Have just tried calling the Tax office but didn't get any joy and was asked to call back next week as they are busy helping those filling out tax returns.

I am filling out R27 and just wanted clarification on the section regarding the deceased estate.

Q12 Do you expect the estate to get any untaxed income or sell any chargeable assets during the administration period. I will be selling a property so have answered yes. Then it says: Is the total tax payable on any untaxed income or Capital Gains Tax likely to be more than £10,000?

The property is worth around £60,000 and I have included this on the correct IHT form. From what I can make out tax will only have to be paid on this if it now sells for more than £60,000 is that right? (Or is tax payable on the total property price?)

getmore4less

Probate valuation is the base line for CGT during admin and you also get an allowance so unlikely to go over that unless it sells for more which means the probate valuation might have been a bit low.

Most income is likely to be taxed so fairly safe to say no.

if it does go over then all you do is more tax returns.
I think the questions are there to just alert HMRC they may have some more work to do on the estate.

Always a good idea to value on the high side if there is no IHT to pay to reduce the chance of CGT.

Peanut_butter_2

So CGT would only be the difference between value at time of death and value at time of sale (if this had increased) ?

getmore4less

yes (there is a £10600 allowance available to personal representatives)

http://www.hmrc.gov.uk/rates/cgt.htm

so if valued at £60k it has to go over £70.6k before you have to worry

Peanut_butter_2

Thank-you

Tuesday_Tenor

EDIT - Please ignore this. I wasn't understanding. See also post #8.

I'm no expert on capital gains tax, but my limited knowledge makes me wonder if you're considering CGT unnecessarily ...

RE the house to be sold:
Was it the deceased's main residence?
If so, there is no CGT issue here.

Others will correct me if I'm wrong.

(Or perhaps it was a second property anyway, so CGT is relevant?)

getmore4less

Tuesday_Tenor wrote: »

I'm no expert on capital gains tax, but my limited knowledge makes me wonder if you're considering CGT unnecessarily ...

RE the house to be sold:
Was it the deceased's main residence?
If so, there is no CGT issue here.

Others will correct me if I'm wrong.

(Or perhaps it was a second property anyway, so CGT is relevant?)

All assets get rebased to current value for CGT on death.
(known as probate value)

All old potential CGT liabilities disapear.

new ones start from the new base

probate valuation can be adjusted subjec to rules, this can reduce CGT for assets that sell for less or the CGT for those that sell for more.

Tuesday_Tenor

Peanut butter; You seem to be understanding fine.
Thanks to gm4l for your help on this.
Please ignore my previous post; I wasn't understanding, but have educated myself a bit with this:
http://www.hmrc.gov.uk/trusts/prs_cg.htm