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Calculation date for Capital gains purposes

Practical Issues
flyer61
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Calculation date for Capital gains purposes

#272499

Postby flyer61 » December 20th, 2019, 9:10 am

Recently a family member died and they had joint shares with their spouse. These shares are now in the spouses sole name. To regularise their situation some of the shares need selling. What is the date for the purposes of calculating the CGT liability. Is it the date of original purchase or is it the date of first death when they became solely owned?

Many thanks to all fools and a merry Xmas to one and all.

scrumpyjack
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Re: Calculation date for Capital gains purposes

#272515

Postby scrumpyjack » December 20th, 2019, 10:17 am

AFAIW the surviving spouse's cost for CGT purposes will be that half the shares were acquired at probate value and the other half at original cost. The current 'pool' of shares will have a cost of the total of those two values.

flyer61
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Re: Calculation date for Capital gains purposes

#272517

Postby flyer61 » December 20th, 2019, 10:27 am

Hi scrumpyjack,

many thanks for the reply. A quick google hasn't nailed AFAIW's meaning, sorry to ask for long hand. Also it looks like the estate will not need to go to probate.

Does that change anything?

scrumpyjack
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Re: Calculation date for Capital gains purposes

#272531

Postby scrumpyjack » December 20th, 2019, 11:11 am

Meant to be short for as far as I am aware.
Doesn't matter whether it goes to probate. If you inherit assets your cost is the value at the date

DrBunsenHoneydew
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Re: Calculation date for Capital gains purposes

#272601

Postby DrBunsenHoneydew » December 20th, 2019, 4:23 pm

If both names were on the shares before death surely the survivor picks up the original cost, as they were already the owner all along (like joint tenancy of a house).

scrumpyjack
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Re: Calculation date for Capital gains purposes

#272620

Postby scrumpyjack » December 20th, 2019, 5:27 pm

A joint owner automatically inherits an asset where the other joint owner dies, but they are not treated as if they had always owned it 100%!

So they will benefit from the uplift in 'cost' to the value of the other owners share at the date of death.

The HMRC website makes it clear that the assets passes at death to the other joint tenant (as they call it) and Inheritance tax might be payable (but would not between spouses

https://www.gov.uk/tax-property-money-s ... k-accounts

PinkDalek
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Re: Calculation date for Capital gains purposes

#272648

Postby PinkDalek » December 20th, 2019, 7:43 pm

DrBunsenHoneydew wrote:If both names were on the shares before death surely the survivor picks up the original cost, as they were already the owner all along (like joint tenancy of a house).


As per scrumpyjack's reply but there are other implications when assets such as houses/unquoted shares are concerned (where IHT is not in play). See the ever helpful Shares and Assets Valuation Manual https://www.gov.uk/hmrc-internal-manuals/shares-and-assets-valuation-manual/svm107140 for background, if of any interest.

It commences (my underlining):

Capital Gains Tax procedures: death and CGT

Market value at the date of death

Section 274 TCGA 1992 provides that where the value of an asset forming part of an estate has been ascertained for Inheritance Tax purposes on a person’s death, that value shall be taken to be the market value of the asset for CGT purposes at the date of death. The value ascertained for IHT purposes applies equally for CGT whether agreed unconditionally or without prejudice. This is notwithstanding the fact that the holding was valued as part of a larger holding by virtue of the estate concept and related property provisions.

If

the tax threshold was not exceeded on the death, or
the shares passed on the death to an exempt beneficiary such as the deceased’s spouse, or
the shares qualified for 100% BR on the death,
so that it was unnecessary to agree a value for IHT/CTT purposes, the value of the shares will not have been ascertained and it will be necessary to consider it afresh when the acquisition value is needed for CGT purposes. ...

flyer61
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Re: Calculation date for Capital gains purposes

#272860

Postby flyer61 » December 22nd, 2019, 12:53 pm

Many thanks for the replies.

No idea how I am going to work out what was paid for them......


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