Disposal/acquisition price for gifted shares

[Bouleversee]

Frantically trying to do my last year's tax return before the end of the month and only just starting (my husband's illness meant everything else was on hold), with no time to backtrack on previous discussions, I would appreciate it if someone (right up your street Gengulphus) could confirm my understanding that one can now just use the closing price (as shown on TMF's historic prices lists) on the date of the transfer rather than have to do complex calculations, quarter up or whatever. Or am I kidding myself? TIA.

[PinkDalek]

Frantically trying to do my last year's tax return before the end of the month and only just starting (my husband's illness meant everything else was on hold), with no time to backtrack on previous discussions, I would appreciate it if someone (right up your street Gengulphus) could confirm my understanding that one can now just use the closing price (as shown on TMF's historic prices lists) on the date of the transfer rather than have to do complex calculations, quarter up or whatever. Or am I kidding myself? TIA.

See your thread over at TMF's Taxes - Practical which I think answers some of your questions (although the thread started about Victoria):

http://boards.fool.co.uk/mv-of-non-spou ... sort=whole (which I've saved here https://web.archive.org/web/20170112143 ... sort=whole although any links therein will not function)

[Bouleversee]

Many thanks, PD.

All very confusing with so much dotting about and links that don't work but although the total m.v. (if using the closing price as quoted on TMF's historic prices) would be £13,379,45, I think I will just use that figure.

Do I gather that the same principle now applies to valuing shares for probate/iht purposes? My husband held all his shares in ISAs and I have had a valuation from the ISA Managers which I think were mid market closing prices. As there won't be any IHT to pay, will that be acceptable, do you suppose?

[scrumpyjack]

HMRC's own notes to completing the IHT forms say that it is fine to use the closing prices printed in the next days newspaper. You do not need to pay for getting quarter up prices.

Page 67 of the notes on form IHT400 say

How to value stocks and shares
You do not have to get a professional valuation for quoted stocks and
shares. You can value shares quoted on the London Stock Exchange by
finding the price of the shares in the financial pages of a newspaper.

[Bouleversee]

Great. Many thanks, Scrumpyjack.

[supremetwo]

My husband held all his shares in ISAs and I have had a valuation from the ISA Managers which I think were mid market closing prices. As there won't be any IHT to pay, will that be acceptable, do you suppose?

Such shares and any ISA cash can be transferred to your own ISA or to another one opened for that purpose in your name.

In which case, the acquisition cost will not matter and you can dispose later free of tax and any HMRC reportings.

https://www.gov.uk/government/publicati ... a-investor
6A.2
Additional permitted subscriptions are limited to the value of the deceased investor’s ISA at their date of death. ISA managers must have processes in place to ensure additional permitted subscriptions do not exceed this limit.
---------------------
6A.3
The surviving spouse can make additional permitted subscriptions with either the manager who held the deceased’s ISA or another manager who agrees to accept the subscriptions

[Gengulphus]

My husband held all his shares in ISAs and I have had a valuation from the ISA Managers which I think were mid market closing prices. As there won't be any IHT to pay, will that be acceptable, do you suppose?

Yes, I suppose so. In particular, AFAIAA mid-market closing prices are what the newspapers publish, so the bit in the IHT400 notes that scrumpyjack quoted basically says that both are OK. (And thanks for pointing that out, scrumpyjack - last time I saw the question of using newspaper valuations, I knew I'd previously seen something by HMRC saying it was OK, but couldn't locate it!)

And more generally, financial service providers (*) will generally supply a date-of-death valuation if requested when one informs them of the death, and I think it's acceptable to rely on that valuation unless it's obviously wrong. Certainly I've done so on things like the amount of accrued-but-not-yet-paid interest on bank accounts, for instance - I haven't gone and calculated my own figure!

(*) Or at least, those in this country will. Foreign providers have been known to refuse to give such a valuation until they receive a copy of the grant of probate to prove that one is the executor, putting one in the silly position of requiring the valuation to deal with IHT and get probate, and requiring probate to get the valuation... :-( It's resolvable, by producing a conservative estimate to produce the initial IHT account, getting the valuation, and then producing a corrective IHT account, but it's a bit of a palaver!

Gengulphus

[genou]

And more generally, financial service providers (*) will generally supply a date-of-death valuation if requested when one informs them of the death,

(*) Or at least, those in this country will.

Gengulphus

Before requesting such a valuation on ISA holdings, check your late husband's provider's charges sheet. These charges have fallen at many brokers, but historically they were eye-watering.

[Bouleversee]

And more generally, financial service providers (*) will generally supply a date-of-death valuation if requested when one informs them of the death,

(*) Or at least, those in this country will.

Gengulphus

Before requesting such a valuation on ISA holdings, check your late husband's provider's charges sheet. These charges have fallen at many brokers, but historically they were eye-watering.

I-web provided me with a "Valuation for the purpose of obtaining Grant of Representation etc." free of charge. Walker Crips printed out a valuation based on mid-market prices at the date of death but said they would charge (0.2% on the first £150k and 0.1% on the balance) for a fully prepared valuation, whatever that means. Probate is on hold till I've finished my tax return, which is why I am on here today.

[Gengulphus]

I-web provided me with a "Valuation for the purpose of obtaining Grant of Representation etc." free of charge. Walker Crips printed out a valuation based on mid-market prices at the date of death but said they would charge (0.2% on the first £150k and 0.1% on the balance) for a fully prepared valuation, whatever that means. Probate is on hold till I've finished my tax return, which is why I am on here today.

As HMRC say that newspaper prices from the next day's newspaper will do, and those are closing mid-market prices for the day of death, I think their printed valuation should do the job, assuming the portfolio contains only shares traded in London. I suspect their "fully prepared valuation" is really for portfolios that contain more esoteric / difficult-to-value investments.

One other point to check is whether their printed valuation details the cash balance, dividends that have gone ex-dividend, and interest that has accrued but not yet been paid (if one is fortunate enough to have an interest-paying broker account). All of them are items that should be included in the IHT valuation.

Gengulphus

[Bouleversee]

Gengulphus wrote:

"One other point to check is whether their printed valuation details the cash balance, dividends that have gone ex-dividend, and interest that has accrued but not yet been paid (if one is fortunate enough to have an interest-paying broker account). All of them are items that should be included in the IHT valuation"

No interest is paid on cash, I'm afraid, but it did give the cash balance and it also indicated where the price was XD or CD. However, I don't know what the significance of that is in this context, though it sounds like more work. We are a long way off deciding what to do about the shares, not a very inspiring list with one exception, so I expect they will be sold in due course. I have yet to read up about the tax situation (now that I have filed my tax return I shall get on with that) while all is in limbo but if you have any nuggets to add in this connection, they will be gratefully received.

[Gengulphus]

Gengulphus wrote:

"One other point to check is whether their printed valuation details the cash balance, dividends that have gone ex-dividend, and interest that has accrued but not yet been paid (if one is fortunate enough to have an interest-paying broker account). All of them are items that should be included in the IHT valuation"

No interest is paid on cash, I'm afraid, but it did give the cash balance and it also indicated where the price was XD or CD. However, I don't know what the significance of that is in this context, though it sounds like more work.

Where it says that the price was XD, it means that there was a dividend that had gone ex-dividend but not yet been paid. The result is that that dividend's value is not reflected in the share price (because ex-dividend shares are traded without the right to receive the dividend concerned) and also not in the cash balance. So basically, that dividend is an 'invisible' asset of the estate on the date of death, similar to interest that has accrued on an interest-paying bank account but not yet been paid - and in both cases, those 'invisible' assets should be included in the estate valuation for IHT.

What I've seen of such matters is that in the UK, all banks told me about both the balance and the accrued-but-not-yet-paid interest on interest-bearing accounts, and the only broker told me the valuation of the shares, the cash balance, and whether the shares were XD or not but left me to look up the amounts of the ex-dividend-but-not-yet-paid dividends and multiply them by the number of shares for myself. That last part was a bit of extra work, but not a great deal - and if one is able to access its statements before obtaining probate (e.g. if it was a joint account), can be simplified to just looking at the next dividend paid after death by the companies indicated as XD. The broker concerned also didn't pay interest on cash balances - or at least not until they were much larger than these were! - so the question of accrued-but-not-yet-paid interest didn't arise on the broker account.

That sounds identical or very similar to what you've seen from your broker, so I think yes, a bit more work determining the amount of ex-dividend-but-not-yet-paid dividends. But not so much that I would pay what sounds likely to be hundreds of pounds for a "fully prepared valuation" to avoid it - i.e. I'd want more reason than that before I would consider the "fully prepared valuation" worth paying for.

Gengulphus