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Where Taxpayers and Advisers Meet

CGT – Unexpected letter from HMRC

Whichway
Posts:5
Joined:Sat Apr 06, 2024 4:18 pm
CGT – Unexpected letter from HMRC

Postby Whichway » Sun Apr 07, 2024 11:48 am

My partner’s mother died in 2021. Diligently filled in Inheritance Tax forms and no Inheritance Tax was due.
We have received a letter from HMRC stating CGT may be due.

The value of the estate for Grant of Probate was:- £817,326.74 gross and £758,761.07 net
The house was sold for £760,000 in mid-March 2022

Are either of the 2 Grant of Probate figures relevant for CGT? If so, which?
And if we do owe CGT, any help as to what form we fill in?

Jholm
Posts:371
Joined:Mon Mar 11, 2019 4:22 pm

Re: CGT – Unexpected letter from HMRC

Postby Jholm » Mon Apr 08, 2024 12:57 pm

Have they specified what they believe CGT is due on? Likely property sale but there would only be CGT on the gain element (sale price, less costs, less probate value, less available exempt amount).

What was the probate value of the house?

Assuming your partner has sold the house (entirely in her name) some time after inheriting it?

Whichway
Posts:5
Joined:Sat Apr 06, 2024 4:18 pm

Re: CGT – Unexpected letter from HMRC

Postby Whichway » Mon Apr 08, 2024 6:37 pm

Hello
Yes HMRC are saying 'You may need to pay Capital Gains tax on the sale of your UK property' - i.e. the sale of my partner's Mother's house after her death

Sorry if this is a daft question but is the 'probate value of the house' the same as the the 'value of the estate' as quoted on the Grant of Probate?

If not - where would I find the 'probate value of the house?'

His mother died in September 2021 and the house was sold in March 2022.

Whichway
Posts:5
Joined:Sat Apr 06, 2024 4:18 pm

Re: CGT – Unexpected letter from HMRC

Postby Whichway » Mon Apr 08, 2024 6:47 pm

Apologies - Additional note:
Having looked through the Inheritance Tax paperwork, I have found Schedule IHT405 ' Houses, land, buildings and interest in land' where we quoted the deceased residence 'Open market value at date of death' as £800K.
This was not queried by the Probate team
Is this the 'probate value of the house?'

Jholm
Posts:371
Joined:Mon Mar 11, 2019 4:22 pm

Re: CGT – Unexpected letter from HMRC

Postby Jholm » Tue Apr 09, 2024 9:11 am

That sounds a lot like it, in which case a loss was made for CGT purposes.

Whichway
Posts:5
Joined:Sat Apr 06, 2024 4:18 pm

Re: CGT – Unexpected letter from HMRC

Postby Whichway » Tue Apr 09, 2024 2:26 pm

One last thing - I hope
His Mother had an outstanding debt from an Lifetime Mortgage , which was £55K when the house was sold. This was included in the Probate Forms as a separate debt on Schedule IHT419
I understand this does not have any impact on the Probate Value of the House (£800K)for Capital Gains Tax . Am I right?

pawncob
Posts:5110
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: CGT – Unexpected letter from HMRC

Postby pawncob » Tue Apr 09, 2024 7:37 pm

Yes.
With a pinch of salt take what I say, but don't exceed your RDA

Whichway
Posts:5
Joined:Sat Apr 06, 2024 4:18 pm

Re: CGT – Unexpected letter from HMRC

Postby Whichway » Wed Apr 10, 2024 10:39 am

Many thanks pawncob and Jholm

A load off our minds. Not being accountants or in the business of buying and selling property the ins and outs of CGT is quite mind blowing.


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