WAE PROBLEM PRINCIPLES Flashcards
Is there a CGT disposal when PRs transfer assets to beneficiaries?
No. Under TCGA 1992, s62(4), the transfer from PRs to beneficiaries is not a disposal for CGT purposes.
What is the acquisition cost for a beneficiary who receives an asset from a deceased’s estate?
The value at the date of death, not the value at the date of transfer.
If shares rise in value between date of death and date of distribution, who pays CGT on that gain?
No one. There is no CGT charge at that point. The beneficiary will pay CGT only on gains from the date of death value.
A beneficiary sells inherited shares for more than their value at the date of death. What is the CGT position?
A CGT charge arises. The gain is the sale price minus the value at date of death.
How does the beneficiary’s marginal income tax rate affect CGT on sale of inherited assets?
It doesn’t directly affect CGT calculation but may affect the CGT rate applied (20% or 10%, depending on whether they are higher/additional rate taxpayers).
Do PRs pay CGT if shares increase in value between death and distribution?
No. PRs do not pay CGT on this rise as there is no disposal when transferring to beneficiaries.
When do personal representatives (PRs) incur CGT during estate administration?
Only when they dispose of assets (e.g. by selling them). There is no CGT on a transfer to beneficiaries, as this is not a disposal under TCGA 1992, s62(4).
Who is liable for CGT if a beneficiary sells inherited shares for £92,000 that were worth £80,000 at date of death?
The beneficiary is liable. Their gain is £12,000.
How is a joint interest with a spouse valued for IHT?
At its full share (e.g. 50%) with no discount, due to related property rules under s161 IHTA 1984.
For a qualifying interest in possession, should you use the value at creation or at date of death?
Always use the value at the date of death.
When minor children inherit under intestacy, do they take absolutely or contingently?
Contingently — they only take if and when they reach 18 (or marry earlier) under s47 AEA 1925.
Are discounts applied when valuing jointly owned property for IHT if co-owned with an unmarried partner?
Yes. A discount (typically 10%) is applied because the co-owner is not a spouse or civil partner.
NCPR 22 order to apply for grant
(a) the surviving spouse/CP
(b) the children of the deceased and the issue of any deceased child who died before the deceased;
(c) the father and mother of the deceased;
(d) brothers and sisters of the whole blood and the issue of any deceased brother or sister of the whole blood who died before the deceased;
(e) brothers and sisters of the half blood and the issue of any deceased brother or sister of the half blood who died before the deceased;
(f) grandparents;
(g) uncles and aunts of the whole blood and the issue of any deceased uncle or aunt of the whole blood who died before the deceased;
(h) uncles and aunts of the half blood and the issue of any deceased uncle or aunt of the half blood who died before the deceased.
(i) Crown (bona vacantia) if no relatives
What must applicants under NCPR Rule 20 state in their application for a grant?
Applicants under NCPR 20 (where there is a will but no proving executors) must:
Identify which category of applicant they fall into (with reference to the will)
Clear off anyone with a better right to apply (e.g. explain why named executors are not acting)
State whether there is a minor beneficiary or life interest — if so, two administrators are required
Do applicants under NCPR 20 need to clear off those with an equal right to apply?
No. They only need to clear off those with a better right. Equal-ranking applicants do not need to be cleared off.
What must applicants under NCPR Rule 22 (intestacy) include in their application?
Applicants under NCPR 22 must:
State their familial relationship to the deceased and confirm they are entitled to the whole or part of the estate
Clear off anyone with a better right to apply (but not those with equal right)
State whether any beneficiary is a minor — if so, two administrators are required
