CGT on sale of house with shared ownership

[Islay]

Hi,
I and my brother have sold a house that was gifted to us by our parents in 1995. Our mother lived in the house and it was my main residence for the 3 years up to her death and house sale. I was her carer.
The house was gifted equally, but we agreed a 60 / 40 split in the proceeds, as I cared for her and dealt with the house sale.
Do we each pay tax on our gain received, or on a 50 / 50 basis?
Thanks

[bd6759]

Strictly 50/50 unless your brother confirms in writing that he gave you the further 10% before the house was sold.

[Islay]

Hi, yes, he put it in writing to the solicitor. Does that mean we pay CGT on money received, 60 / 40%? Someone has said that we both pay 50% on the gain and that the 10% is classed as a gift and therefore not liable for CGT. Just a little confused as to what we do.
Thanks for your help.

[someone]

You both pay CGT on "what you sold".

If you owned it 50:50, sold and then your brother gave you 20% of his proceeds, then it's taxed 50:50 - the gift was a gift of cash.

If you owned it 60:40 because your brother gave you 20% of his share *before sale* then you are taxed on the 60% you owned and him on the 40% BUT your acquisition cost of the 10% of the property that he gave you will be different to the rest of the property and he will have to pay CGT on the 10% gift to you calculated at the time of the gift.

Unless he gave you the extra share a long time ago (at the very least in a different tax year), then there's going to be little difference in the tax due from either of you and it's probably easier to do it 50:50 unless the paperwork is absolutely explicit that the gift occurred before sale when you really should report what really happened even if it makes no ultimate difference to the tax due.

Gifts are not taxed but disposals are - and your brother giving you a share of the house is a disposal AND a gift - so he pays CGT on the disposal but neither of you pay tax on the gift.

Note that transactions in land MUST be in writing, so unless you have something that says something along the lines of "I give X one fifth of my share of the property known as 1 main street, Land Registry Title number blurb" then the gift was one of cash. (Lawyers will pad it out with a lot more words, call it a Deed of Gift, and charge you a few hundreds to a thousand pounds for it, but it's essentially the same as that one sentence)

[bd6759]

Hi, yes, he put it in writing to the solicitor. Does that mean we pay CGT on money received, 60 / 40%? Someone has said that we both pay 50% on the gain and that the 10% is classed as a gift and therefore not liable for CGT. Just a little confused as to what we do.
Thanks for your help.

CGT is charged on the disposal of an asset. A gift is a disposal. CGT is based on the market value of the gift.

Your brother should have declared the disposal to HMRC and paid CGT on it. Whether that is an issue depends on how long ago and if he filed a tax return for that year.

Transactions in land must be “evidenced” in writing. As long as you brother has, or will, put something in writing to confirm the gift and the uneven shares, the gift will be effective.