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Where Taxpayers and Advisers Meet

Capital gains tax on share transfer from estate?

James2205
Posts:9
Joined:Wed Aug 06, 2008 3:57 pm
Capital gains tax on share transfer from estate?

Postby James2205 » Fri Jun 01, 2012 9:06 pm

Hi there. I wonder if anyone can help me. My Dad's father, i.e. my grandfather, has recently died. Although he left everything to his wife, she has agreed to vary his will and pass certain cash and shares directly to his/their three children. In turn, one of the children, my Dad, would like to directly pass on his share of the cash/shares to my sister and myself.

My questions are:
1) Does the transfer of the shares to my father constitute a chargeable event for CGTpurposes? I think not...?
2) Does the transfer of the shares from my father to my sister and I constitute a chargeable event for CGTpurposes. If this was the case what is the base cost of the shares for the purposes of the calculation; is it the price my grandfather paid for the shares (likely quite low as an awfully long time ago)?

Many thanks for your help - it's greatly appreciated.
Judy

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Capital gains tax on share transfer from estate?

Postby maths » Fri Jun 01, 2012 9:54 pm

Assuming grandmother executes a Deed of Variation then your dad acquires the shares at their probate value (ie market value at date of death of g'father).

If he then gifts the shares to you straight away then effectively although it is a disposal for CGT the shares won't have changed in value hence no CGT liability.

James2205
Posts:9
Joined:Wed Aug 06, 2008 3:57 pm

Re: Capital gains tax on share transfer from estate?

Postby James2205 » Sat Jun 09, 2012 11:42 am

Hi

Thanks so much for this reply. Greatly appreciated. Sorry for the delay in posting this but I've only just picked your reply. I didn't seem to get an email this time to say I'd been answered. All makes perfect sense to me as an accountant and tax accountant (of many years ago!). Thanks again - this is a great site.

Judy

pqtaxation
Posts:353
Joined:Wed Aug 06, 2008 3:38 pm

Re: Capital gains tax on share transfer from estate?

Postby pqtaxation » Sat Jun 09, 2012 10:57 pm

The DoV to be executed by grandmother could pass shares directly to you and your sister rather than via your father thereby saving on share 0.5% stamp duty and possibly small market maker’s buy/sell spread. Also avoids PET for your father possibly resulting in reduced liability to IHT on his death. Also if shares have fallen in value since grandfather’s death in line with market decline may avoid possibly unusable capital losses in father’s name and future capital gains for you and your sister whose base cost would be probate value rather than lower current market value.


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