Do I need to tell HMRC no CGT payable?

00ec25

nige123 wrote: »

As the property was owned by the estate up until its sale I would have thought my own tax arrangements were irrelevant, even though I am one of the several beneficiaries?

holly_hobby wrote: »

There is no CGT on tsf to the executor or beneficiaries - as I say its when the asset is actually sold that CGT comes into play.

seems fairly clear. Property was sold by the estate (executor/personal representative) therefore the OP needs to contact HMRC/deceased estates helpline and ask them if they want a full blown Estates and Trust Return done or not given that there is a trivial amount of income tax but no CGT due. Won't help that its from 2011 but I doubt they will require the full return but they do need to be told

nige123

00ec25 wrote: »

seems fairly clear. Property was sold by the estate (executor/personal representative) therefore the OP needs to contact HMRC/deceased estates helpline and ask them if they want a full blown Estates and Trust Return done or not given that there is a trivial amount of income tax but no CGT due. Won't help that its from 2011 but I doubt they will require the full return but they do need to be told

Can the helpline actually give an authoritative decision on that? I've read bad things about HMRC helplines, though never had to use one, and thought I could just write with the details of the income tax payable and see what they come back with.

John_Pierpoint

nige123 wrote: »

A B*rclays Savings Bond. It was paid gross during the deceased's lifetime and the first monthly interest payment (about £250) after their death was also paid gross. Subsequent payments were net of tax.

I'm intending to write to the bereavement section in Cardiff as the deceased had had no dealings with HMRC.

You may have the same problem I had 5 years ago (only in my case the estate was in the IHT band so the income tax position of the deceased had to be finalised before the IHT could be calculated correctly.)
Was mum's nest egg at Barclays more than £50k?
Mum was getting gross income and had no tax office - was she really that income poor ?

In my case it took Barclays three goes to calculate the correct interest owing, each time producing another cheque.

https://forums.moneysavingexpert.com/discussion/2726359

I very carefully sold the house as bare trustee for the beneficiaries, but in my case the valuation had been "ascertained" by the Valuations Office Agency, so I can see why in your case HMRC might be reluctant to agree that the beneficiaries have CGT losses to carry forward.

In my case they all had modest profits to report, though no CGT to pay, unless they had other profitable disposals in that year (unlikely in 2009/10).

I think I would dump the quandary on your beneficiaries, if they are "ordinary" tax payers without gains to report for the year, by writing to give them the results of the sale.

faddy

John_Pierpoint wrote: »

Was mum's nest egg at Barclays more than £50k?

Yes, but total income was in any case below her personal allowance.

Mum ..... had no tax office

Is that at all unusual when only income is state pension and interest on savings?

I very carefully sold the house as bare trustee for the beneficiaries

Is that another way of saying that it was transferred to the beneficiaries before sale, or something else?

John_Pierpoint

faddy wrote: »

Yes, but total income was in any case below her personal allowance.

Is that at all unusual when only income is state pension and interest on savings?

You are right, I probably had not realised how much the interest rate went down in 2008 and the age allowance went up in 2008.
[In my case the £50k ++ was generating so much tax liability that the deceased was sinking deeper into tax debt each year despite having a "K" code applied to his feeble works pension in an attempt to collect it - a "K" code can collect tax at 50%].

http://webarchive.nationalarchives.gov.uk/20090909205015/http://hmrc.gov.uk/rates/it.htm

faddy wrote: »

Is that another way of saying that it was transferred to the beneficiaries before sale, or something else?

As soon as the executor has [agreed the IHT] obtained probate [advertised for claimants] he is free to distribute the estate.

A maximum of 4 people can legally own land, so if there are more beneficiaries than that they need a trustee to legally own the land on their behalf.
So when the house is to be sold it is customary for the executor to sell as bare trustee for the beneficiaries anyway.

However there can be at least two pitfalls as far as minimising the tax goes:

HMRC might challenge the valuation with a view to obtaining more IHT or more CGT.

If the estate HAS to sell the house in order to meet its liabilities (eg IHT) then the house could never have become the property of the beneficiaries anyway.

In your case neither of these apply, so you could happily be instructed by your beneficiaries to sell the house as their trustee, leaving them to worry about their own individual capital tax position.

faddy

John_Pierpoint wrote: »

So when the house is to be sold it is customary for the executor to sell as bare trustee for the beneficiaries anyway.

I understand that this involves "appropriation" of the property to the beneficiaries, but what are the mechanics of appropriation, and who does it (conveyancing solicitor?)

John_Pierpoint

This exchange might help - it seems to be an informal area of agreement.

https://forums.moneysavingexpert.com/discussion/4474589

Following the grant of probate, I wrote to each beneficiary to tell them they now owned a beneficial interest of x% (it varied by generation) and got them to instruct me to sell the property for not less that £xxx,xxx. [The house had redevelopment value BUT there was no way that a consortium of 10 beneficiaries would have achieved a profitable result. One young couple could have got it for less than the eventual sale price. Four years on, they may be regretting their decision. I just wanted to avoid any comeback from HMRC and more so 20:20 hindsight recriminations in the family.]

jimmo

This seems to be getting a lot more complicated than it needs to be.

The OP says that the house was sold in a falling market. On a forum I think we can all accept that the sale will have produced a loss compared to the value of the house on the date of death his or her late mother but that will not be good enough if HMRC get involved.

Is the loss of any potential use?

If the house was sold by the estate the answer seems to be a definite “No“. If the house was sold by the executor as bare trustee of the beneficiaries the answer is “Maybe”.

Then it depends on the personal circumstances of each beneficiary whether their personal share of any loss has potential value to them.

In my own case I know I am the executor for my mother and the beneficiaries are myself and my 3 siblings. In my own mind I am certain that a capital gains loss would be of no use to any of us so if a similar situation arises after my mother dies and, subject to a family chat, I won’t spend too much time on a pointless academic exercise. I do realise that in so doing I would risk being sued by my siblings but I will be happy with that risk.

As to informing HMRC, their computer based information gathering techniques appear to have come on in leaps and bounds in recent years so it is very likely that they already know that the OP sold a property that was not their home in 2011 and there is every danger that a little brown envelope could be dropping through their letter box at any time.

If any of the beneficiaries would have a potential use for their share of a capital gains loss or the executor doesn’t know and can’t talk to them it will all need to be done properly. If the beneficiaries are all close family I would report the sale as executor and claim that the value at the date of death was the same as the sale price. No gains, no losses to speak of and minimal chance of HMRC coming sniffing.

nige123

Is it relevant that the property was part of the residue rather than being left to named beneficiaries? Would any residuary beneficiary be able to use their share of any capital loss?