Asset sold after probate for more than its estimated value: IHT or CGT?

JC640

Mother died leaving a work of art which I as executor intend to sell by auction once I have probate. Her estate will incur IHT. I have had the painting valued, and I put that figure on the IHT submission. If it sells for more than the estimate, do I notify HMRC and pay the additional IHT due. Or do I, as executor, declare and pay CGT on the increase between the estimated and the actual values?

poseidon1

JC640 said:

Mother died leaving a work of art which I as executor intend to sell by auction once I have probate. Her estate will incur IHT. I have had the painting valued, and I put that figure on the IHT submission. If it sells for more than the estimate, do I notify HMRC and pay the additional IHT due. Or do I, as executor, declare and pay CGT on the increase between the estimated and the actual values?

I assume you have completed form iht 407 to support iht 400, and in so doing provided a full description of the painting together with the professional valuation. If so this should provide HMRC with relevant data to determine if the value is fair market value for iht purposes, calculate tax and grant probate accordingly.

Should you then proceed to sell, for a sum exceeding the agreed iht value, an executor tax return reporting the gain will be required with cgt potentially assessable thereon. Remember that the estate is entitled to the personal cgt exemption for up to 2 tax years after date of death.

JC640

Thank you!