Did I overpay CGT?

ognum

The reason the CGT asks for your personal allowance as well as your income for the year is so they can establish what rate of CGT you pay.  Higher rate tax payers pay more.

pkmid

BarelySentientAI said:

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

You are answering as the estate of your mother not as yourself.  It isn't yours.

How did the estate get it?

My mum purchased her house in 1980 at some point. I dont know how I would fill out the calculator based on her information, she paid around £30k for the house. I'm sorry I'm really not following how I was not meant to use the calculator based on the fact it was inherited. Her will mentioned gift of residue for her estate to be given to me and my brother.

thegreenone

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

This is the one I chose.   You are the Property Owner because you are the Executor of your Mum's Estate.

You clicked on the right one but, as above, your mother's estate is liable for the CGT and it's nothing to do with your personal allowance. 

Contact HMRC.

_Penny_Dreadful

pkmid said:

p00hsticks said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

Not that familiar with the calculator, but I imagine not, as you hadn't at that point actually inherited it - it still belonged to the estate and you and your brother were going to inherit the proceeds of the sale....

IT's ok I'm sorry I'm just very stressed now that I've UNDER paid it. Here is a screenshot,if I make that figure 0 it means I've underpaid by approx £600 if the other poster says personal allowance doesn't apply. 

That other person being me is correct, your personal allowance is for income tax, not capital gains tax.  The amount of capital gains tax due is dependent on whether you are a basic rate tax payer or a higher rate tax payer.  Basic rate tax payers are charged CGT at 18% (unless the capital gain plus their income for the tax year pushes them into the higher rate tax bracket) and higher rate tax payers are charged CGT at 28%.  Therefore, a CGT calculation also has to consider your income tax position for the tax year.

In 2023/24 Baldrick earned 15k from his job and 15k net capital gains from selling a property.  Baldrick is a basic rate tax payer and will pay 18% CGT on his 15k net capital gain.

Edmund earned 40k from his job and had a 15k net capital gain from selling a property.  Edmund is a basic rate tax payer but his gain pushes him into the higher tax rate band because 40k + 15k is greater than 50,271 (NB: Scotland has a different higher rate banding to rUK).  Edmund will pay 18% on the first 10,271 of his net capital gain and 28% on the remaining 4,729.

Percy earned 60k from his job and had a net capital gain of 15k from selling a property.  Percy is a higher rate tax payer and will pay 28% CGT on his net capital gain.

The above being moot if you yourself never incurred a capital gain in the first place.

propertyrental

* you did not inherit the property - it was never transferred into your name

* you personally never owed any CGT as you never owned the property

* your brother never owed any CGT as he never owned the property

* the increase in value between Probate and sale could either have been subject to

a) CGT owed by the estate, or

b) revaluation of the probate value which might have impacted on Inheritance tax

Hoenir

pkmid said:

BarelySentientAI said:

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

You are answering as the estate of your mother not as yourself.  It isn't yours.

How did the estate get it?

My mum purchased her house in 1980 at some point. I dont know how I would fill out the calculator based on her information, she paid around £30k for the house. I'm sorry I'm really not following how I was not meant to use the calculator based on the fact it was inherited. Her will mentioned gift of residue for her estate to be given to me and my brother.

What did you figures did you submit to the HMRC when submitting the CGT return? 

As it sounds as if the HMRC are wishing to be lenient and allow you to correct the mistake. Rather than being heavy handed. 

pkmid

Hoenir said:

pkmid said:

BarelySentientAI said:

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

You are answering as the estate of your mother not as yourself.  It isn't yours.

How did the estate get it?

My mum purchased her house in 1980 at some point. I dont know how I would fill out the calculator based on her information, she paid around £30k for the house. I'm sorry I'm really not following how I was not meant to use the calculator based on the fact it was inherited. Her will mentioned gift of residue for her estate to be given to me and my brother.

What did you figures did you submit to the HMRC when submitting the CGT return? 

As it sounds as if the HMRC are wishing to be lenient and allow you to correct the mistake. Rather than being heavy handed. 

I had put the
house value as £340000
sold for £365,000
£5k in costs to sell
capital gain tax annual exempt amount £6k
taxable gain £13,754
multiplied by 18% tax rate = £2,475.72
income for 23/24 £31k
Personal allowance for 23/24 tax year £12,570 (this part is what has confused me)


problem is HMRC won't tell if you've done it right or wrong. I submitted the payment for £2,475.72 plus the late payment. The letter from HMRC telling me about capital gains tax was addressed to myself personally with my national insurance number as the reference. It didn't address me as the estate or anything. If the personal allowance is not allowed then I have under paid by £605.40.

sheramber

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

That  is for selling your personal proprty.

When you sold the house it was not your personal proprty, it belonged to  your mother's estate, so that calculator is not relevant in this case.

If you want further help you can contact the HMRC bereavement Help Line

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/bereavement-and-deceased-estate

pkmid

thegreenone said:

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

This is the one I chose.   You are the Property Owner because you are the Executor of your Mum's Estate.

You clicked on the right one but, as above, your mother's estate is liable for the CGT and it's nothing to do with your personal allowance. 

Contact HMRC.

Thank you, do you think that means I owe more than I thought? I'm on hold with HMRC at the moment 42+ minutes and counting.... When I say "I owe" it can be used as "the estate owes" as it was only me.

BarelySentientAI

pkmid said:

thegreenone said:

pkmid said:

sheramber said:

pkmid said:

Hoenir said:

The estate has no personal allowances for income tax. 

Hi, I added in the calculator that I had inherited it. Was I not meant to include the personal allowance when asked on the calculator?

You  weren't selling it as a personal  item.

You didn't own it and had not inherited it as it was still in  your mother's estate.

You inherited the value of it once it was sold and the estate  settled.

You would have inherited it if it had been transferred to your name .

You were selling it as Personal Representative of the estate so personal allowance is not relevant .

Ok but by that logic what option do you pick on the calculator?

This is the one I chose.   You are the Property Owner because you are the Executor of your Mum's Estate.

You clicked on the right one but, as above, your mother's estate is liable for the CGT and it's nothing to do with your personal allowance. 

Contact HMRC.

Thank you, do you think that means I owe more than I thought? I'm on hold with HMRC at the moment 42+ minutes and counting.... When I say "I owe" it can be used as "the estate owes" as it was only me.

Be careful thinking that - it isn't the same thing.  People have got very worried about debts that the estate owed because they thought (as the only executor or only beneficiary) that they would have to pay it out of their own money.

What this is all about is how much tax the estate should have paid before distributing the residue.