BADR/CGT Eligibility

msieperson7565

Hi,

Just doing some financial tidying up before I have a chance to see my accountant.

I've recently liquidated 350k via MVL in my late spouses business, I was a 50% shareholder and inherited the other 50% when they died. There has been 0 increase in value between date of death and now.

Using BADR on this would it just be the 175k(Capital gains from when i obtained my original non inherited 50% shares) that's subject to tax or would it be the full 350k(including the inherited 50%)?

Many thanks

poseidon1

Surprised the accountant has not already confirmed the position ( in writing ) as part of the MVL.

In any event you have two separate pools for CGT calculation purposes.

Your husband's inherited 50% shares revalued to market value at date of death with all s165 BADR gains erased, and your own personal shares liable to tax inclusive of your own deferred gain.

No doubt if your accountant is assisting with your self assessment tax return, the split CGT computation will be reflected therein.

Dead_keen

I'm sorry about your loss.

There are lots of conditions that are relevant to getting BADR so make sure you ask about them all (e.g. where you an employee or director of the company, was it a trading company or not, did the trade cease in the three years before you got the cash and so on).

From a technical perspective, I am not sure that poseidon1 is right that there are two separate pools. I think there is a single pool but that's a geeky thing for the accountant. If the qualifying conditions apply to the 50% that the OP owned throughout, this may mean that BADR applies to all shares. As poseidon1 mentions though, the OP would get a market value uplift for the 50% inherited, meaning that the gain would be £350k proceeds less £175k inherited base cost (**) less any purchase price for the OP's original 50%.

** The fact that there has been zero growth in value between the date of death and now makes my spiddy senses tingle and makes me more concerned about the availability of BADR. There might be great answers as to why BADR applies. Or there may not be. Leaving that aside, share valuation is a weird thing in that if a company is worth (say) £100 and there are two 50% shareholders, each shareholders' shares may be worth, say, £40 each. So the gain may be more than the OP suggests.