Which tax am I liable for as executor?

steveharvey2001

I am executor of an estate that was calculated to be under the IHT limit at the time of the probate application.

Date of death 23.12.2012
Probate applied for 1.2 2013
oath sworn 11.2.2013
Probate granted 14.2.2013

The estate was made up from (approx. figures):

Land & Buildings (est) £210K 'not ascertained'
Vehicle, furniture and effects £2K
Cash £111K
Funeral expenses -£3K

Net Total £320K (5K below IHT threshold)

The final sale price of the house was £219.950, sold in June 2013, putting the estate over the IHT threshold by approx £5K.

What I need to understand is, am I liable to IHT (40% of £5K) or CGT at ??% of £10K (less any reliefs).

I have already distributed most of the estate funds but have kept back about 3K in case of tax liability.

Thanks in advance

Steve

John_Pierpoint

Repost this on the "saving tax" a sub-set part of the "pure money" part of the forum.
I will chip in there about being in a very similar situation.
.
How many people (or other legal entities?) were entitled by the will to a share in the house.
ie exactly what did the will say was to be done with the real estate asset?.

nom_de_plume

This thread suggest you will be liable to CGT, assuming the information contained therein is correct.

I understand the executor is liable for the CGT and any personal allowances available can be used (£10,600 for the year in question). Info here

Have HMRC written to confirm all tax due on the estate has been paid?

John_Pierpoint

Strictly speaking there can be other factors - it really revolves round the point at which the trustee acting on behalf of the estate can say the tax has IHT valuation as at the date of death has been "ascertained" and the trustee then becomes a bare trustee on behalf of the beneficiaries, with the get out that the trustee can make a loss within 2 years of the death and get that taken into account for IHT.

I have found myself, in the days before we all had access to individual sale values from the Land Registry, trying to statistically argue backwards 12 months from the sale value to the death value. It felt a bit like haggling with an Arab in a souk.

steveharvey2001

The only evidence I have it that the probate was granted on the basis of by IHT205 form submission which included the 210K valuation on the property. I understand that this is not the same as the value being ascertained.

I have not prepared estate accounts yet but I do have all figures recorded and a draft of the accounts however I have kept approix 3K back in the executor's account case of a final tax liability.

Is there an HMRC office that I need to contact to get this clarified to I can wind up the estate.

One question I forgot to ask is whether the estate agents and solicitors fees on the property disposal are tax deductable. This was over £3,000 and a significant proportion of the "gain".

Steve

joerugby

http://www.hmrc.gov.uk/cgt/property/calc-cgt.htm#4


"If you've spent extra money to buy, sell or improve your property, you can deduct certain costs.
Costs you can deduct include:

• fees or commission for professional advice or services, for example, Capital Gains Tax valuations, solicitors' and estate agent or advertising fees
• improvement costs to increase the value of the property - but not normal maintenance costs such as repairs or decorating
• Stamp Duty Land Tax and VAT (unless you can reclaim the VAT)"

John_Pierpoint

Other side of this story here:
https://forums.moneysavingexpert.com/discussion/comment/60338717#Comment_60338717

Even if you sold as the executor of an estate still in probate as a trustee you have.........
entitlement to the Annual Exempt Amount for the tax year in which the death occurred and the following two tax years. After that there's no tax-free allowance against gains during the administration period.
Find out more about death, inheritance and Capital Gains Tax
it can depend on what the will actually says and how many debts the deceased actually had.

If you had reposted as I suggested you would have got better advice. This is a pure tax question that revolves round the status of the trustee and the accuracy of the initial valuation.