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Where Taxpayers and Advisers Meet

Liability of an estate to CGT

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm
Liability of an estate to CGT

Postby Remittub » Fri Aug 12, 2022 7:07 am

I am currently the executor to 2 estates - viz. I am co-executor to my brother's estate in Dublin (but have "stood aside", allowing the Irish solicitor deal with the day-to-day administration for simplicity) and am also sole executor to my wife's estate. My brother died in April 2020, but the administration is still on-going, and distribution of the assets has therefore yet to occur. My wife died in February 2022 - I have yet to make her final tax return as executor to her estate. The beneficiaries to my brother's estate are, myself, my wife and our two daughters. My wife and I have mirror wills, leaving all assets to each other.
My question relates to the shareholding being inherited into my wife's estate.
I assume that my wife will be deemed to have acquired her inherited shareholding in April 2020 (for which we have a formal valuation). Even though I am sole beneficiary to her estate, I suspect that I (as executor to her estate) will be required to (potentially) pay CGT in the UK for her (inherited) portion of my brother's shareholding for the period between April 2020 and February 2022. Is this correct, and will I need to get a formal stockbroker valuation to determine the disposal value, or can I just research LSE's values online ? As she held no other stocks and shares in her sole name, the full CGT allowance will be available.
Ireland work on the principle of CAT (Capital Acquisition Tax) where the beneficiaries to an estate pay tax on assets acquired. My wife's inheritance from my brother's estate has therefore already paid CAT to the Irish Revenue. So, a second question is, under the double taxation agreement, is it possible to offset any (potential) CGT payable in the UK, by the amount of CAT paid in Ireland ??
Any advice with respect to either of these questions will be greatly appreciated !

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Liability of an estate to CGT

Postby Remittub » Fri Aug 19, 2022 9:50 am

This thread seems to have lost visibility as I have received no replies ! Some basic advice on my 2 questions would be GREATLY appreciated !

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: Liability of an estate to CGT

Postby AGoodman » Fri Aug 19, 2022 11:21 am

Even though I am sole beneficiary to her estate, I suspect that I (as executor to her estate) will be required to (potentially) pay CGT in the UK for her (inherited) portion of my brother's shareholding for the period between April 2020 and February 2022. Is this correct, and will I need to get a formal stockbroker valuation to determine the disposal value, or can I just research LSE's values online ?

- No, your wife's interest in your brother's estate was uplifted for tax purposes on her death so you likely inherit the shares at the Feb 22 market value and there is no CGT on the gain between 2020 and 2022 (s.62(1) TCGA)
- when you come to sell, you will need the Feb 22 market values as your acquisition cost. There's no requirement to get a professional valuation.
- i doubt you can offset the CAT as it is being paid on a gain which is tax free in the UK.

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Liability of an estate to CGT

Postby Remittub » Fri Aug 19, 2022 11:32 am

No, your wife's interest in your brother's estate was uplifted for tax purposes on her death
I don't quite understand "uplifted" in this context ! To satisfy my curiousity, could you expand on this ? !!

MANY thanks for your guidance !!

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Liability of an estate to CGT

Postby Remittub » Fri Aug 19, 2022 11:34 am

... and will I need to disclose the inheritance in her last tax return / IHT submissions ?

AGoodman
Posts:1734
Joined:Fri May 16, 2014 3:47 pm

Re: Liability of an estate to CGT

Postby AGoodman » Fri Aug 19, 2022 1:45 pm

Under s.62, your late wife's executor/administrator is deemed to have disposed of all her assets and immediately reacquired them at market value. This is a deemed disposal but is free of capital gains tax. Accordingly, her estate is considered to have acquired the assets at the Feb 2022 market value and any prior gains are wiped out.

Yes, you need to declare all your late wife's assets for IHT and this would include inheritances. If she had not yet received anything, there won't be anything to declare on a regular tax return.

Remittub
Posts:46
Joined:Sat Jan 24, 2015 6:30 pm

Re: Liability of an estate to CGT

Postby Remittub » Sat Aug 20, 2022 4:27 am

Many thanks for your advice !


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