Income tax and CGT between death and distribution

[dominoman]

My father died in January and I am an executor. We have submitted for IHT400 and all the other documents to HMRC and soon will be able to apply for probate.

What do we need to do about income tax and CGT from date of death. My father had some shares that have fallen heavily and others that have risen. Do we have to pay CGT on the ones that rose (one share is up over 100k GBP since he died)? I assume that we can offset the risers with losses from others that have fallen so we only pay CGT on the net amount? Do we need to actually sell them to realise this loss or gain, or does transferring to an executor count as a disposal?

Is there any CGT-free allowance like there is for living persons?

Thanks for any help.

[Lee Young]

Estates pay income tax and capital gains tax. For the tax year of death and the following two tax years the estate will have a CGT allowance equivalent to that of an individual, but none thereafter.

For income tax everything is taxed at the basic rate, with no allowances.

HMRC's website provides useful starting information regarding the administration period and the tax responsibilities of the prs.

[dominoman]

Thanks. I've read the info I could find but am still not very clear.

What would happen in this scenario:
My father died in Jan 2020. His house was valued at 500k at date of death. By the date of distribution (let's say it's Jan 2021) it is worth 650k and is passed to one of the beneficiaries of the will. That's a capital gain of 150k. Does that gain get spread over 2 tax years so the estate pays CGT on 150k minus the two sets of £12300 CGT allowance?

There are also some shares that have gained significantly. If those are worth more at distribution than at date of death then do those also get taxed by the estate, regardless of whether they are sold by the estate (and cash passed to beneficiaries) or they are passed to beneficiaries directly?

[Lee Young]

Appropriation to a beneficiary is not a disposal for CGT purposes. The beneficiaries are deemed to acquire the assets at their date of death value so any increase is then taxed on them on eventual sale.

[maths]

It is not unusual for assets that have increased in value post death to be appropriated (ie transferred) to all the inheriting beneficiaries ie the executors sell none of them.

Each beneficiary has an annual exemption and the overall CGT charge may be lower than if the executors sell.

Transfer loss making shares also to beneficiaries to allow gain/loss offsets.

Need to also check rates of CGT if beneficiaries sell.