Wills Income/Capital Gains

Question 1

What is the threshold for estate income whereby the PRS would have to report it to HMRC?

Answer 1

500 for each year of administration – cannot be carried over

Question 2

Is the full personal allowance given for the year of death even though they didn’t live the full year?

Answer 2

Yes

Question 3

Do you get the personal allowance for the year after death?

Answer 3

nO

Question 4

Is death a disposal for CGT?

Answer 4

No

Question 5

What CGT do PRs have to pay?

Answer 5

For disposal made in the year before death

Question 6

If there are losses in year of death, can these be offset for CGT? How?

Answer 6

Yes, can be carried back against gains from past 3y

Question 7

What is meant by ‘tax-free uplift’

Answer 7

When assets transfer to PRs on date of death, you don’t pay CGT

Question 8

When can CGT arise during estate administration>

Answer 8

PR sells assets and realises a gain

Question 9

When must chargeable gains on residential property be reported?

Answer 9

60 days of completion

Question 10

What happens CGT wise when an asset is transferred to a beneficiary?

Answer 10

Inherits asset at probate value –CGT only arises if they sell (they pay on the gain from the probate value)

Question 11

What CGT reliefs apply>

Answer 11

Annual CGT relief

Main Residence Relief

Loss on sale relief

Administrative losses

Question 12

What is loss on sale relief?

Answer 12

If PRs sell shares within 12mo of death or land within 4y of death for less than probate value

Can use the lower sale price for IHT

Question 13

What is the CGT implication when using loss of sale relief?

Answer 13

The lower value becomes the acquisition cost for CGT

Cannot claim both CGT loss and IHT loss relief

*iht relief is usually preferable