Stamp duty or not on inherited property
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Fair comment. If the beneficiary can save themselves £20k by doing so well worthwhile. The solicitor doing the transfer will be liable if it does not work!I am afraid its not as simple as that, the executor does not have the sole power to transfer the beneficial interest in a property to the beneficiaries. That requires a transfer deed which all of the beneficiaries sign as well as the executor. The executor may actual sign twice once as the executor and then as a beneficiary.
It might have been possible to only transfer part of the beneficial interest to certain beneficiaries and that is what I would have liked to do, say transfer 80% leaving the estate holding 20%, however my solicitor (STEP) although they thought that would be possible, was not sure. There would be up to 5hrs research fee at £250ph in order to confirm that.0 -
Yorkshireman99 wrote: »Fair comment. If the beneficiary can save themselves £20k by doing so well worthwhile. The solicitor doing the transfer will be liable if it does not work!
It was whether 80% could be transferred leaving 20% with the estate which was the unknown and would cost c£1250 to investigate. The CGT position was clear.
Say 80% was transferred to 4 beneficiary then for CGT purposes there would have been 5 owners each with a £11,700 allowance.0 -
The problem with a technical point like this is that “opinions” on here really aren’t much help hence the need for proper professional advice. Of course that is not to say on more clear cut issues the advice from here IS useful provided it is treated with caution.SevenOfNine wrote: »No solicitors on here whose credentials you could check.
"Opinions", definitely of value as you can see from some of the useful information already given by some of the others here, they will give you food for thought & perhaps some information &/or pointers to be researched prior to consulting a professional.0 -
I am afraid its not as simple as that, the executor does not have the sole power to transfer the beneficial interest in a property to the beneficiaries. That requires a transfer deed which all of the beneficiaries sign as well as the executor. The executor may actual sign twice once as the executor and then as a beneficiary.
......
Sometime the beneficial interest is from DOD.
Ohers at a specific point in the estate administrations.
no need for a deed.0 -
[FONT=Verdana, sans-serif]I think we have gone way off the OP's question here but, it's an interesting subject.[/FONT]
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[/FONT]getmore4less wrote: »Sometime the beneficial interest is from DOD.
[FONT=Verdana, sans-serif]Yes I understand that is correct but would that only apply to a property if it had been specifically left in the will and was not part of the residue estate?[/FONT]
[FONT=Verdana, sans-serif]'I leave property No1 to my two son's and the rest of my estate to my wife.'[/FONT]
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[/FONT]getmore4less wrote: »Others at a specific point in the estate administrations.
no need for a deed.
[FONT=Verdana, sans-serif]If the property was beneficially owned by the estate from the date of death, then apart from the estate administration period ending, because the residue of the estate had been ascertained before the date of sale, what are these other specific points which would not require a deed you refer to?[/FONT]
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[/FONT][FONT=Verdana, sans-serif]HMRC's view:[/FONT]
[FONT=Verdana, sans-serif]'[/FONT][FONT=Verdana, sans-serif]Applying the rule that assets remain vested in the personal representatives until residue has been ascertained unless [/FONT][FONT=Verdana, sans-serif]specific steps[/FONT][FONT=Verdana, sans-serif] have been taken to vest the assets in advance of ascertainment of residue usually defeats unwarranted claims in this area. [/FONT]
[FONT=Verdana, sans-serif]https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg30781[/FONT]0 -
That is the specific point during administration and can happen before the sale.0
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It might have been possible to only transfer part of the beneficial interest to certain beneficiaries and that is what I would have liked to do, say transfer 80% leaving the estate holding 20%, however my solicitor (STEP) although they thought that would be possible, was not sure. There would be up to 5hrs research fee at £250ph in order to confirm that.
I'm not sure this 'have cake and eat it' approach to tax is acceptable to HMRC.
Surely either the estate shoulders CGT in it's entirety or the beneficiaries shoulder it individually. Otherwise you can have the situation where, for example:
There is a high value estate estate with large CGT liability, the only high-rate taxpayer beneficiary decides to use the the estate as a CGT shield (because the estate pays CGT at the basic rate), the remaining basic rate taxpayer beneficiaries decide to pay CGT individually so that they can each benefit from a CGT annual allowance.0 -
I'm not sure this 'have cake and eat it' approach to tax is acceptable to HMRC.
Surely either the estate shoulders CGT in it's entirety or the beneficiaries shoulder it individually. Otherwise you can have the situation where, for example:
There is a high value estate estate with large CGT liability, the only high-rate taxpayer beneficiary decides to use the the estate as a CGT shield (because the estate pays CGT at the basic rate), the remaining basic rate taxpayer beneficiaries decide to pay CGT individually so that they can each benefit from a CGT annual allowance.
[FONT=Verdana, sans-serif]Yes, again an interesting point. CGT is based of beneficial ownership so if there are 5 beneficial owners when contracts are exchanged then HMRC will have no option but to accept that the CGT liability lies with those 5 parties, each of whom will have an annual allowance.[/FONT]
[FONT=Verdana, sans-serif]It would not matter whether the 5 parties were ordinary owners e.g. A holds the legal interest in trust for A,B,C,D&E nor whether one of those parties were the PRs of an estate.[/FONT]
[FONT=Verdana, sans-serif]So if legally it was possible to split the beneficial ownership between the estate and some of the beneficiaries then CGT would follow.[/FONT]
[FONT=Verdana, sans-serif]I think HMRC are quite happy for taxpayers to manipulate the beneficial ownership to minimize CGT. Their manual however does say to check the taxpayer is right. For example if there were 2 beneficiaries both higher rate taxpayers and both already having used their own annual allowance then they would want to argue that the beneficial interest was still with the estate, which still has its annual allowance and very generous 'acquisition cost' allowance based on a %age of the probate value which would not be available to individuals.[/FONT]0 -
[FONT=Verdana, sans-serif]I think HMRC are quite happy for taxpayers to manipulate the beneficial ownership to minimize CGT. Their manual however does say to check the taxpayer is right. For example if there were 2 beneficiaries both higher rate taxpayers and both already having used their own annual allowance then they would want to argue that the beneficial interest was still with the estate, which still has its annual allowance and very generous 'acquisition cost' allowance based on a %age of the probate value which would not be available to individuals.[/FONT]
I accept in this slightly unusual scenario that the granting of an additional annual allowance is unfair, but this is a loophole in HMRC's rules.0 -
[FONT=Verdana, sans-serif]Yes I agree, but only if that loophole exits. Remember I do not know whether an estate can transfer only part of its beneficial ownership because I did not go ahead and spent the £1250 on research. This money would have been wasted if the answer was no, but even if the answer was yes, the £1250+VAT would have added to the other costs of following that option.[/FONT]I accept in this slightly unusual scenario that the granting of an additional annual allowance is unfair, but this is a loophole in HMRC's rules.
[FONT=Verdana, sans-serif]Nobody on this forum knows the answer either, because that was my very 1st post, asking if any others has done a part transfer. I was looking to weigh up whether to spend the £1250.[/FONT]
[FONT=Verdana, sans-serif]There were other reasons why I needed to transfer only part, the bulk of the IHT bill could only be paid from the sale proceeds, so the estate needed to retain enough of a share to cover that.[/FONT]
[FONT=Verdana, sans-serif]I my case, in the end the property was sold by the estate, but I claimed that the administration period had then ended and HMRC agreed that the CGT liability, which was therefore nil, rested with all of the beneficiaries and none with the estate. So the estate saved the CGT bill without inuring the costs of the transfer.[/FONT]0
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