capital gains tax

charlie2015

I wonder if you could help me I am a beneficery of my late fathers estate 1of5. the PRS of my late fathers estate put the house on the market for £650,000 in mid april 2014,and sold it for £625,000,by 5th may,they went to probate on the 29 may 2014,and swore under oath that the gross value of the estate was £554,000 and net value was £550,000,a difference of £71,000 or£75,000.the beneficeries have now been told we are liable for CGT,are all the beneficeries liable for CGT or the 2 PRs who gave misinformation under oath,there has been no communication between the PRs and beneficeries,where do I go from here.

SeniorSam

The statement of value can only ever be approximate until the property is sold, assuming it is sold without any intended delay, say to let it. There is a reasonable period of time allowed for selling and don't forget all costs of selling (solicitors and agents fees) are deductable.

Speak with the Probate office and explain the differenece in sale price and valuation and they may just make an adjustment. After all there may have been a £650,000 nil rate band allowance?

Should they not do so (unusual), then the 5 beneficiaries each have a capital gains tax allowance to offset a gain.

Sam

g6jns_2

charlie2015 wrote: »

I wonder if you could help me I am a beneficery of my late fathers estate 1of5. the PRS of my late fathers estate put the house on the market for £650,000 in mid april 2014,and sold it for £625,000,by 5th may,they went to probate on the 29 may 2014,and swore under oath that the gross value of the estate was £554,000 and net value was £550,000,a difference of £71,000 or£75,000.the beneficeries have now been told we are liable for CGT,are all the beneficeries liable for CGT or the 2 PRs who gave misinformation under oath,there has been no communication between the PRs and beneficeries,where do I go from here.

Are you sure you mean CGT? If the executors sold the house then you are not liable to any CGT at all. If they deliberately undervalued the estate any tax liability is theirs not the beneficiaries. Who has told you that you are liable? What are PRS?

getmore4less

If probate was granted AFTER the sale then there must have been misrepresentation of the estate value.

what nil rate band was available? any other assets? any IHT paid?

The estate pays but that just means you get less EACH.

I would have a word with HMRC they might be interested if it changes the IHT due.

charlie2015

yes it is capital gains tax , PRs are executors , PRs have told us we are liable plus the solicitor they engaged it is not IHT as below joint £650 000 threshold many thanks for replys

Keep_pedalling

SeniorSam wrote: »

Should they not do so (unusual), then the 5 beneficiaries each have a capital gains tax allowance to offset a gain.

Sam

Are you sure about that Sam? I thought that if some assets were being disposed of by an estate, then the estate has its own CGT allowance so it would only be one however many beneficiaries were involved. If on the other hand the ownership of the property was transferred to the beneficiaries and then subsequently sold each one would be able to use their allowances.

getmore4less

If they can convince HMRC you are probably better off the amount due is to by the 5 benifitiaries.

very rough numbers
tax if estate pays £21000
if the 5 beneficiaries then could be as low as £4500

if they went to marker at £650 and put less on the submitted forms might be worth a legal indepenant option if there is anything you can do to recover anything

G6JNS

charlie2015 wrote: »

yes it is capital gains tax , PRs are executors , PRs have told us we are liable plus the solicitor they engaged it is not IHT as below joint £650 000 threshold many thanks for replys

The beneficiaries would only be liable for capital gains tax if they had been left the house and then sold it. Did that happen or did the PR's sell the property and give the beneficiaries the proceeds? The personal representatives and the solicitor are talking rubbish! If the PRs lied about the value then you should report this to HMR&C and get the real value corrected. Whatever happened the beneficiaries are not liable for anything.

charlie2015

when I queried with solicitor why the PRS did not inform HMRC of true figure . he told me that once probate had started the sum could not be changed . this did not make sense to me as I would have thought it would have better to keep HMRC informed .I am not sure he is telling me the truth . as he is acting for the PRS and was involved with probate should I contact HMRC with my information many thanks for replys

SeniorSam

YES. It can certainly do no harm and the information you have been given seems doubtful,

Sam

NordicNoir

What was the actual date of your fathers death? Do you know how much the house was valued at for probate?

As the estate did not originally have to pay IHT, the value of the house has not in fact been officially agreed ("ascertained") by HMRC. Any difference between the market value at the date of death (which should be the amount used for probate, but may not be) and the sale price (less allowed costs) is potentially subject to CGT.

If the residual of the estate had already been ascertained, the CGT is payable by the beneficiaries at their personal rate (and they can each use their CGT allowance). If not, the estate pays the CGT, at the higher rate with only one allowance.