Probate final stages - How to transfer house to ltd company efficiently and other questions

probate_slave

My own feeling is that what you propose sounds unnecessarily complicated, whether to transfer shares before sale, or else to buy out the other beneficiaries. Personally I would forgo the potential saving of £280, surely negligible for an estate worth £390k, and ask Equiniti to sell the shares. If you want to buy out the other beneficiaries you would pay them directly, not the estate. Your own book cost would be, as you say, the sum of 1/6th probate value plus the amount paid to beneficiaries. And the other beneficiaries, rather than the estate, would then be individually responsible for any gain.

I guess the total value of shares is only around £15k. If the estate sells them all, any gain since death should be covered by the £3k allowance and no CGT will be due. However, you don't mention what happened to the house, whether or when it was sold at a gain. If the estate already has a CGT bill, it might be worth assenting the shares to beneficiaries, selling on their behalf, and allowing them to use their own annual CGT allowances.

Just to clarify, you mention in your posts "CGT on dividends". The estate is taxable on interest and dividends received during the administration, but this is income tax rather than CGT. The link you gave in your OP shows the rates and, on the following page, the various procedures depending on the amount of income & gains received.

Any CGT due on the house or the shares would be at 24%.

The 60-day reporting requirement applies only to the sale of residential property.

desjazz

probate_slave said:

I guess the total value of shares is only around £15k. If the estate sells them all, any gain since death should be covered by the £3k allowance and no CGT will be due. However, you don't mention what happened to the house, whether or when it was sold at a gain. 

Thanks, @probate_slave. The house is still to be sold. I've had delays but will be buying it myself via a ltd company. As it's been 2 years since the death, it is likely it will have increased in value and I'm only at the start of the mortgage application process so expect to obtain a new value of the house, so it could incur a gain (although the £3k AEA will be applicable for 3 years and therefore will lead to £9k that can be used to minimise any gain).

If the estate already has a CGT bill, it might be worth assenting the shares to beneficiaries, selling on their behalf, and allowing them to use their own annual CGT allowances.

This sounds like the best way forward as in the last couple of years, due to the money that was in the bank, there has been interest over the £3k allowance, so it could be useful to assent them as you say. Would that be a case of just adding each of us to the names on the shares and then doing the necessary to sell the shares and distributing the funds to each of the 6 of us once the sale has been completed? My siblings have no interest in keeping the shares and were happy for them to be sold; I was just looking at the best way to do it and hoping to save on costs but at this point, it does sound like more work I don't need, o will concede that it might be better to just do the transfer to legatees and then oversee them being sold on my family's behalf (if that was basically what you meant?).

Just to clarify, you mention in your posts "CGT on dividends". The estate is taxable on interest and dividends received during the administration, but this is income tax rather than CGT. The link you gave in your OP shows the rates and, on the following page, the various procedures depending on the amount of income & gains received.

Any CGT due on the house or the shares would be at 24%.

The 60-day reporting requirement applies only to the sale of residential property.

Noted on all of the above.

poseidon1

desjazz said:

probate_slave said:

I guess the total value of shares is only around £15k. If the estate sells them all, any gain since death should be covered by the £3k allowance and no CGT will be due. However, you don't mention what happened to the house, whether or when it was sold at a gain. 

Thanks, @probate_slave. The house is still to be sold. I've had delays but will be buying it myself via a ltd company. As it's been 2 years since the death, it is likely it will have increased in value and I'm only at the start of the mortgage application process so expect to obtain a new value of the house, so it could incur a gain (although the £3k AEA will be applicable for 3 years and therefore will lead to £9k that can be used to minimise any gain).

If the estate already has a CGT bill, it might be worth assenting the shares to beneficiaries, selling on their behalf, and allowing them to use their own annual CGT allowances.

This sounds like the best way forward as in the last couple of years, due to the money that was in the bank, there has been interest over the £3k allowance, so it could be useful to assent them as you say. Would that be a case of just adding each of us to the names on the shares and then doing the necessary to sell the shares and distributing the funds to each of the 6 of us once the sale has been completed? My siblings have no interest in keeping the shares and were happy for them to be sold; I was just looking at the best way to do it and hoping to save on costs but at this point, it does sound like more work I don't need, o will concede that it might be better to just do the transfer to legatees and then oversee them being sold on my family's behalf (if that was basically what you meant?).

Just to clarify, you mention in your posts "CGT on dividends". The estate is taxable on interest and dividends received during the administration, but this is income tax rather than CGT. The link you gave in your OP shows the rates and, on the following page, the various procedures depending on the amount of income & gains received.

Any CGT due on the house or the shares would be at 24%.

The 60-day reporting requirement applies only to the sale of residential property.

Noted on all of the above.

Perusing some of your responses, there still appears to be misconceptions about exemptions and allowances.

Firstly the estate's annual £3,000 CGT allowance. It is not cumulative. If there are no estate CGT disposals in a given tax year the exemption expires. If you sell the estate property in  the current tax year, there is just a single £3k exemption available, not £9k.

In your 2nd paragraph you mention bank interest earned on cash  '... over the £3k allowance...' . No such allowance exsists for estate income liable to income tax ( in this case at the 20% rate on interest). To be clear, the estate faces two separate and distinct tax categories here CGT on selling assets  (shares and property )  and income tax  on dividends and bank interest, they are not interchangeable!  Probate_slave has tried to make this clear to you.

As for assenting the shareholdings to  siblings  prior to sale in order to shelter any gain within each of their respective £3,000 exemptions, I assume you have checked with them that they have not used it or intend to use it? ( best not to assume without checking).

If you are going down the assent path, best this is done in writing. The following  template might assist -



"  I, [Full Name of Personal Representative], being the [Executor/Administrator] of the estate of [Deceased's Full Name], deceased, hereby assent to the transfer of the following personal property to [Beneficiary's Full Name], namely [Description of personal property], which is now vested in me as personal representative."



However, if the shareholding gains since death, are very modest, you need to decide if the assent process is worth the hassle for the estate  tax saved.

Finally, are you aware of the rules for submitting a final informal estate tax return, compared to the formal requirement for annual form SA900 HMRC income tax returns? Your  plans for the winding up of the estate suggests you may find completion of annual SA900s a challenge.