Capital Gains on Inherited Property

Adelphes

Hi all

I'm a bit confused as to whether or not we need to pay capital gains tax.

Mum died end of February this year and the sale of the house is currently taking place.

The house was in trust for myself and my sister.

As the property had been held in a family trust, probate wasn't necessary.

Mum had lived in the house alone for the past 10 years and the house has been empty since her recent death.

Myself and my sister have been the trustees for the last two years, after the previous trustees were removed. We are also sole beneficiaries.

If my understanding is correct, we would only pay CGT on any increase in value from the date of mum's passing to the date of sale completion.

Hoping someone can advise.

Many thanks in advance for any input.

Keep_pedalling

You should take professional advice on this, I think it likely that CGT is calculated from the value on the date it was unfortunately placed in trust. Unfortunately there were lots of sharks out there convincing people to place their homes in useless trusts. They benefit from fat fees but the love ones are left to sort out a far more complex estate.

Are you aware that although you mother was o longer the legal owner of the house she was still the beneficial owner so counts as part of her estate for IHT purposes?

PS. I have asked the mods move this to the cutting tax board which is the appropriate place for this thread.

Adelphes

Thank you.

poseidon1

It will entirely depend on what type of trust was established intially and whether it was created during lifetime of both parents or arose out of the will of your deceased father.

More Information required on how the trust came about, and what the actual trust clauses stated. Can you supply redacted wording of the operative clauses of the trust document?

If you are lucky the tax outcome on eventual sale of the property may not be very harsh if the trust proves to be a qualifying IPDI arrangement.

Adelphes

It is a Family Protection Trust, put in place by mum following the death of our father.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82004063#Comment_82004063

Are you saying on the death of your father your mother inherited his share of the house outright, but then for some reason was convinced by someone to set up a trust in her own name whereby she gave herself a continued right to live in the property for life ,with the property then passing to you and sister on her death? Alternatively is the trust still in exsistence?

You said in your intial post, the original trustees were removed. This is not by any chance another of the infamous trusts set up by McClure solicitors in Scotland - see below

https://www.bbc.co.uk/news/uk-england-68070449

If so, you should have said so, since the tax implications of untangling the property from the trust may well be far more complicated than mere CGT. Separate trust IHT compliance and potential IHT may also be in point.

Adelphes

Yes it was McClures - but in England.

We only discovered the McClures situation two years ago, so sought to have the matter resolved by a solicitor who has had prior experience of dealing with former victims of McClures.

We managed to remove original trustees and replace with myself and sister.

The trust has been registered with HMRC via our solicitor (not Jones White) but has not yet reached the 10 year anniversary.

According to our solicitor, upon sale of the house, we (as Trustees and sole beneficiaries) inform HMRC that we have sold the asset and the Trust is thereby closed.

Just to add - property has been valued at £125k

poseidon1

OK, I have covered a virtually identical scenario a few months back and attach the thread below -

https://forums.moneysavingexpert.com/discussion/comment/81884464#Comment_81884464

The detailed guidance regarding how the trust gain should be calculated with the benefit of your mother's personal private residence exemption relief, followed by how the trust should be legally terminated, is covered by my post on 14 February 2026 at 2.48pm.

The priniples and suggested actions outlined there will be the same as your circumstance, so can I ask you to read that carefully and let me know if you have any further queries.

As in the previous case the reccomendation is you get a tax accountant with specialist trust tax compliance experience to actually do the tax returns for you. A solicitor may be needed to draft the deed to terminate your trust.

Incidentally, your solicitor was incorrect in telling you the trust automatically ends with the sale of the property. It does not, the trust is an independent entity separate from the property and needs to be dealt with as set out in my post. In view of that incorrect advice, it begs the question whether they would be an appropriate firm to deal with the trust termination deed,

Adelphes

Thank so much you for all your information.

I am going to contact HMRC for advice.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82006493#Comment_82006493

You can try, but HMRC are not in the business of giving tax advice to anyone, and especially not in these complex circumstances where tax is not the only aspect.

Its a shame your mother ( and very many others) was talked into creating an expensive and useless structure.

Adelphes

It is more than a shame but just something we have to deal with.

Thank you again for your advice.

Can I ask what your background is? Are you a financial/tax advisor? You appear to have alot of knowledge in these matters.