House sale after inheritance tax paid

Spinandyoga

It looks like my father in laws house will sell for £7k more than I entered on the IHT 400 form. There has also been a small income tax repayment paid to the estate since his death. Do I need to declare both these on Form C4 to update the form and pay the additional inheritance tax? Thank you

RAS

There may be a small CGT liability rather than IHT. Needs to be paid within 60 days.

Spinandyoga

Thank you .The money is divided between 3 so under £3k each which wouldn’t attract CGT. I have found it unclear whether to report it for IHT.

Keep_pedalling

If you have already paid IHT, the yes you will need to submit an amended value as the additional £7k will be subject to IHT. If the estate was covered by the available allowances then you don't need to submit an amendment unless the £7k take the estate into IHT territory.

The estate only gets one £3k for CGT allowance regardless of how many beneficiaries there are.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82135309#Comment_82135309

Unless the property was assented in favour of the three beneficiaries prior to sale, this would have been a straightforward executor's disposal with only a single estate CGT exemption of £3,000 available.

See below information on assents if you are not sure this occurred -

https://www.lawble.co.uk/assent-of-property/

If you are claiming the sale of the property to be subject to CGT ( whether as executors or beneficiaries), you do not report the higher sale amount for IHT purposes. You simply pay the lower tax rate on capital gains - see below

https://crestsurveyors.co.uk/what-happens-if-house-sold-for-more-than-probate/

At only £7k above probate value I cannot see HMRC would have material grounds to insist you revisit the IHT return by way of a C4 update.

As for the income tax repayment, how small was it?

There is no de minimis amount with regard to C4 amendments, but if you do submit a C4 for that sum and you are certain there will be no further debts or assets emerging from the estate, I would also submit IHT 30 clearance certificate to accelerate HMRC's closure of the IHT file after settling any small liability on the income tax repaid.

Spinandyoga

Hi - thank you for your advice. The tax repayment was £689

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82136004#Comment_82136004

Ok, likely HMRC will want the 40% tax thereon so submit C4 and IHT 30 as suggested.