Impact of Inheritance Tax and Capital Gains
If you are the beneficiary of inheritance it is always important that you know exactly where you stand legally. Take on the advice of professional solicitors with a reputation of working within this area of law and can offer expert advice and guidance related to all family inheritance issues. When it comes to beneficiaries and capital gains tax on inheritance, what is it that you need to know? Always look for legal assistance from a professional team of solicitors with experience in dealing with family law and inheritance issues and they will provide you with all of the information you require to make the right choices along the way for you.
A beneficiary is not usually liable to pay Capital Gains Tax when talking about an inheritance they have received. There are circumstances where this might not be the case however, including if a beneficiary has had an asset transferred to them from the estate and they have then sold that asset at a later date for a profit. These assets could be a property or a share for example. If an asset is sold for a profit at a later date it could become liable for Capital Gains Tax. If Capital Gains Tax is payable by the Estate, there is a chance that this could have an impact on the amount received by the beneficiary.
If you are going through probate there is a specific way to work with Capital Gains Tax, and your solicitor will be able to provide you with all of the important and necessary information. When a person dies, and the estate goes through Probate, the Executor of the Will, or the Administrator (if there is no Will), is responsible for dealing with the entire process. This process involved dealing with all legal, administrative, and tax issues relating to the estate. The Executor or Administrator must calculate all tax that is due from the estate, including Capital Gains Tax, Income Tax, and Inheritance Tax, and pay that tax in full.
This process takes place during the Administration Period and is the time period where assets in the estate must either be sold or transferred. Any assets sold for profit may be liable for Capital Gains Tax. Also, any assets that were sold by the deceased up to a year prior to death could also be liable for Capital Gains Tax. The Executor or Administrator must settle any Capital Gains Tax issues prior to distributing the remaining money to any beneficiaries of the estate. What this process means is that beneficiaries are not liable for Capital Gains Tax, as these issues will have been settled prior to any inheritance being received.
Individuals and Executors work with an annual allowance for Capital Gains Tax of £11,700 currently. Any asset sold for a profit below this threshold will not be liable for Capital Gains Tax, although any other asset sold during the following 2-years will add to the total, with the total amount over that threshold liable at 28% for residential properties, or 20% on non-residential properties.