Is CGT payable when cashing in shares?

CaptainWales

Decesaed left shares. Beneficiary gets residue of estate and happy for the shares to be cashed in and she gets the cash rather than a transfer of shares.

What do i need to consider from a cgt perspective? Shares have increased approx £8k since DOD. I am aware that the CGT rate will be reduced from april onwards so eondering whether best to sell before then.

Martin_t_2

The shares are part of the estate, and therefore subject to inheritance tax. On the date that the estate is settled they will become the benificiaries' to do with as they like, or they can opt to have the shares sold before distribution of the estate. Any liability for CGT will start from the date probate is completed (with the value that was placed on the shares for probate purposes - which could have been months before probate completion).

IANAL and all recalled from when I inherited my fathers shares...

Hoenir

Sell the shares this tax year. As the estate will have a lower CGT allowance to offset the gain made in the 24/25 tax year. 

Keep_pedalling

Hoenir said:

Sell the shares this tax year. As the estate will have a lower CGT allowance to offset the gain made in the 24/25 tax year. 

Alternatively, sell enough this tax year to use up this year’s allowance, and the rest after 5th April to avoid it totally. You should be able to do this provided the testator died in this or the previous tax year. 

CaptainWales

Thanks. To calculate the initial value of the shares should i take the value as at DOD or when probate granted? 

user1977

CaptainWales said:

Thanks. To calculate the initial value of the shares should i take the value as at DOD or when probate granted? 

Should be the value at date of death (which hopefully was also the value declared for probate purposes?).

CaptainWales

Keep_pedalling said:

Hoenir said:

Sell the shares this tax year. As the estate will have a lower CGT allowance to offset the gain made in the 24/25 tax year. 

Alternatively, sell enough this tax year to use up this year’s allowance, and the rest after 5th April to avoid it totally. You should be able to do this provided the testator died in this or the previous tax year. 

user1977 said:

CaptainWales said:

Thanks. To calculate the initial value of the shares should i take the value as at DOD or when probate granted? 

Should be the value at date of death (which hopefully was also the value declared for probate purposes?).

Testator died in the 22/23 tax year. 

Yes, I used the DOD. Shares have increased circa £10k since that date - as it will be the estate paying any tax, what would the rate be - is it 20% of any gain?

Also, I'm now a bit worried about the property values I declared. These were my best estimates at the time but it now turns out I overestimated one property and underestimated the other (main residence). Should stress that this would not have impacted payment of IHT because none was due i.e I didn't underestimate something to avoid any tax. When those 2 properties are sold, presumably I would need a local estate agent to estimate their worth at DOD and use that to see if any CGT due?

Keep_pedalling

CaptainWales said:

Keep_pedalling said:

Hoenir said:

Sell the shares this tax year. As the estate will have a lower CGT allowance to offset the gain made in the 24/25 tax year. 

Alternatively, sell enough this tax year to use up this year’s allowance, and the rest after 5th April to avoid it totally. You should be able to do this provided the testator died in this or the previous tax year. 

user1977 said:

CaptainWales said:

Thanks. To calculate the initial value of the shares should i take the value as at DOD or when probate granted? 

Should be the value at date of death (which hopefully was also the value declared for probate purposes?).

Testator died in the 22/23 tax year. 

Yes, I used the DOD. Shares have increased circa £10k since that date - as it will be the estate paying any tax, what would the rate be - is it 20% of any gain?

Also, I'm now a bit worried about the property values I declared. These were my best estimates at the time but it now turns out I overestimated one property and underestimated the other (main residence). Should stress that this would not have impacted payment of IHT because none was due i.e I didn't underestimate something to avoid any tax. When those 2 properties are sold, presumably I would need a local estate agent to estimate their worth at DOD and use that to see if any CGT due?

Where an estate is well outside IHT territory it is best to get 3 EA valuations and use the highest valuation to minimise a CGT liability when  you come to sell the properties. Unfortunately you are stuck with the guestimate values you originally submitted for any CG calculation. 

You now potentially have 2 assets with gains and one with a loss, so your overall gain may or may not have a CGT liability. I would definitely sell enough shares now to use up this years allowance. You could then transfer the remaining shares to the beneficiary so that they can use their own allowance to sell them. 

CaptainWales

I have checked the probate application i made and doesn't seem that I had to give a breakdown of the two property estimates. Do they ask for a breakdown? Potentially is that a way around my over and under estimation?