Did I overpay CGT?

pkmid

My mum passed away in 2021, my brother remained in the house. I moved out approx 2018. I was the executor for her estate and sold my mum's house in 2023. I got a letter from HMRC saying I haven't paid capital gains tax. I thought I'd worked it out correctly and had to pay approx £2k as the house value increased by about £30k from probate to sale. I'm wondering if I overpaid as my brother was living there the whole time? It's very confusing. If I owed it then fine but part of me worries I did the calculator wrong. I lived in the house from 1988 - 2018 so not sure if I got any relief from that.

p00hsticks

Who was the house left to after your mother died ?
Was it left in her name (i.ee. belonged to the estate) or transferred into the names of the beneficiaries ?
Exactly when in 2023 did you exchange / complete on the sale - was it before or after April 5th ?  

thegreenone

If you did it online, HMRC would have written to confirm the amount you need to pay or query.  I know CGT rates have changed but I don't know when they changed.  Perhaps you were working to old rates but HMRC should have picked that up.

Someone with more knowledge than me will come along shortly.

I sold my late Mum's flat in 2021 and it went for £25k more than the probate estimate.  I paid £1725.25 but that was the old rates of CGT.

pkmid

p00hsticks said:

Who was the house left to after your mother died ?
Was it left in her name (i.ee. belonged to the estate) or transferred into the names of the beneficiaries ?
Exactly when in 2023 did you exchange / complete on the sale - was it before or after April 5th ?  

it was left to myself and my brother but I was the sole executor. It was left in her name since probate was carried out and we exchanged in September 2023.

pkmid

thegreenone said:

If you did it online, HMRC would have written to confirm the amount you need to pay or query.  I know CGT rates have changed but I don't know when they changed.  Perhaps you were working to old rates but HMRC should have picked that up.

Someone with more knowledge than me will come along shortly.

I sold my late Mum's flat in 2021 and it went for £25k more than the probate estimate.  I paid £1725.25 but that was the old rates of CGT.

I did it online yeah but only based off of their calculator, it wasn't clear to me what the rules are whether I had lived in that house for most of my life or whether my brother living there had any affect on the total amount. 

_Penny_Dreadful

pkmid said:

My mum passed away in 2021, my brother remained in the house. I moved out approx 2018. I was the executor for her estate and sold my mum's house in 2023. I got a letter from HMRC saying I haven't paid capital gains tax. I thought I'd worked it out correctly and had to pay approx £2k as the house value increased by about £30k from probate to sale. I'm wondering if I overpaid as my brother was living there the whole time? It's very confusing. If I owed it then fine but part of me worries I did the calculator wrong. I lived in the house from 1988 - 2018 so not sure if I got any relief from that.

You don't get Private Residence Relief (PRR) for the period that your mother owned the property nor do you get PRR from when when you took ownership to the time the property was sold just because your brother was living there.  To qualify for PRR the property has to be your only or main residence.  Your brother would get PRR on his share though because the property was his only or main residence.

From the dates given the property has never been your residence since you inherited it so you are not entitled to any PRR.  Your dates are vague and you haven't said what shares the property was owned but I'll assume it was 50/50 between you and your brother so that you each made a gain of 15k between when the ownership was transferred to you and when you sold the property.  In the 2023/24 tax year you had a 6k CGT allowance to use meaning your taxable gain would be 9k and you would be taxed at either 18% or 28% or a combination of both depending on your other income that tax year so that makes the minimum CGT due 1,620 and the maximum CGT 2,520.  Did you file a CGT return within 30 days of selling the property?

p00hsticks

pkmid said:

thegreenone said:

If you did it online, HMRC would have written to confirm the amount you need to pay or query.  I know CGT rates have changed but I don't know when they changed.  Perhaps you were working to old rates but HMRC should have picked that up.

Someone with more knowledge than me will come along shortly.

I sold my late Mum's flat in 2021 and it went for £25k more than the probate estimate.  I paid £1725.25 but that was the old rates of CGT.

I did it online yeah but only based off of their calculator, it wasn't clear to me what the rules are whether I had lived in that house for most of my life or whether my brother living there had any affect on the total amount. 

As I understand it , it doesn't matter whether you or your brother lived in it either before or after your mums death, as the property has never belonged to either of you, but to your mum / your mums estate.

An estate has a single CGT allowance, which in the tax year 2023-24 was £6,000.

So as you say that you sold if for (around) £30k more than the probate value declared, you should have paid CGT on around £24k, less selling costs etc. I think (but hopefully a more knowledgeable person that I will be able to confirm) that the CGT rate for property sold from an estate  is 28%, so it does sound to me as if there is probably more CGT due if you only paid £2k. 

p00hsticks

_Penny_Dreadful said:

pkmid said:

My mum passed away in 2021, my brother remained in the house. I moved out approx 2018. I was the executor for her estate and sold my mum's house in 2023. I got a letter from HMRC saying I haven't paid capital gains tax. I thought I'd worked it out correctly and had to pay approx £2k as the house value increased by about £30k from probate to sale. I'm wondering if I overpaid as my brother was living there the whole time? It's very confusing. If I owed it then fine but part of me worries I did the calculator wrong. I lived in the house from 1988 - 2018 so not sure if I got any relief from that.

You don't get Private Residence Relief (PRR) for the period that your mother owned the property nor do you get PRR from when when you took ownership to the time the property was sold just because your brother was living there.  To qualify for PRR the property has to be your only or main residence.  Your brother would get PRR on his share though because the property was his only or main residence.

From the dates given the property has never been your residence since you inherited it so you are not entitled to any PRR.  Your dates are vague and you haven't said what shares the property was owned but I'll assume it was 50/50 between you and your brother so that you each made a gain of 15k between when the ownership was transferred to you and when you sold the property.  In the 2023/24 tax year you had a 6k CGT allowance to use meaning your taxable gain would be 9k and you would be taxed at either 18% or 28% or a combination of both depending on your other income that tax year so that makes the minimum CGT due 1,620 and the maximum CGT 2,520.  Did you file a CGT return within 30 days of selling the property?

The OP has clarified in a subsequent post to their initial one that the property was never transferred into his or his brothers name but remained in that of the estate, so I don't think many of your comments are applicable in this particular case (specifically, about the brother being able to claim PPR, about them being able to each use their CGT allowance and about the rate applicable). Happy to be corrected. 

pkmid

p00hsticks said:

pkmid said:

thegreenone said:

If you did it online, HMRC would have written to confirm the amount you need to pay or query.  I know CGT rates have changed but I don't know when they changed.  Perhaps you were working to old rates but HMRC should have picked that up.

Someone with more knowledge than me will come along shortly.

I sold my late Mum's flat in 2021 and it went for £25k more than the probate estimate.  I paid £1725.25 but that was the old rates of CGT.

I did it online yeah but only based off of their calculator, it wasn't clear to me what the rules are whether I had lived in that house for most of my life or whether my brother living there had any affect on the total amount. 

As I understand it , it doesn't matter whether you or your brother lived in it either before or after your mums death, as the property has never belonged to either of you, but to your mum / your mums estate.

An estate has a single CGT allowance, which in the tax year 2023-24 was £6,000.

So as you say that you sold if for (around) £30k more than the probate value declared, you should have paid CGT on around £24k, less selling costs etc. I think (but hopefully a more knowledgeable person that I will be able to confirm) that the CGT rate for property sold from an estate  is 28%, so it does sound to me as if there is probably more CGT due if you only paid £2k. 

That's scary, there was a personal allowance of £12,570 that I could claim on? Is this not correct? With that and the capital gain exemption of £6000 it left a remainder of approx £2.5k

From the calculator:

This is the amount of your income that you don't pay tax on.

In the tax year 2023 to 2024 the UK Personal Allowance was £12,570 unless you:

• earned more than £100,000
• claimed Blind Person's Allowance
• claimed Marriage Allowance

_Penny_Dreadful

pkmid said:

p00hsticks said:

pkmid said:

thegreenone said:

If you did it online, HMRC would have written to confirm the amount you need to pay or query.  I know CGT rates have changed but I don't know when they changed.  Perhaps you were working to old rates but HMRC should have picked that up.

Someone with more knowledge than me will come along shortly.

I sold my late Mum's flat in 2021 and it went for £25k more than the probate estimate.  I paid £1725.25 but that was the old rates of CGT.

I did it online yeah but only based off of their calculator, it wasn't clear to me what the rules are whether I had lived in that house for most of my life or whether my brother living there had any affect on the total amount. 

As I understand it , it doesn't matter whether you or your brother lived in it either before or after your mums death, as the property has never belonged to either of you, but to your mum / your mums estate.

An estate has a single CGT allowance, which in the tax year 2023-24 was £6,000.

So as you say that you sold if for (around) £30k more than the probate value declared, you should have paid CGT on around £24k, less selling costs etc. I think (but hopefully a more knowledgeable person that I will be able to confirm) that the CGT rate for property sold from an estate  is 28%, so it does sound to me as if there is probably more CGT due if you only paid £2k. 

That's scary, there was a personal allowance of £12,570 that I could claim on? Is this not correct? With that and the capital gain exemption of £6000 it left a remainder of approx £2.5k

From the calculator:

This is the amount of your income that you don't pay tax on.

In the tax year 2023 to 2024 the UK Personal Allowance was £12,570 unless you:

• earned more than £100,000
• claimed Blind Person's Allowance
• claimed Marriage Allowance

Your personal allowance is for income tax, not capital gains tax.

Was the property ever put in the names of you and your brother or was it sold by your late mum's estate and you and your brother just received the proceeds of the sale as per her will?

Hoenir

The estate has no personal allowances for income tax.