It’s difficult to know where you stand on Capital Gains Tax during Probate when you’re dealing with a loved one’s estate. It’s much more complicated when it comes to shares, but have no fear: we’ve put together this guide to assist you figure out if you’ll be charged Capital Gains Tax on your shares during Probate.
To begin, it’s important to note that, while the value of the shares must be included in the estate for Probate purposes, capital gains tax will not be due while the estate is in Probate. Whether or not Capital Gains Tax is required on shares in Probate is determined by whether or not they are sold during the process and whether or not their value has increased since the date of death.
Overview of Capital Gains Tax
CGT (Capital Gains Tax) is a profit tax. CGT is due when someone sells an asset for a profit. Shares, artwork, collectibles, antiques, and even company assets are all examples of this. The sale of some property may be subject to capital gains tax.
CGT is typically levied at a rate of 20%, with the exception of property, which is charged at a rate of 28 percent. Capital Gains Tax, like income tax, has a tax-free allowance. The tax-free allowance was £11,700 in 2018/2019, rising to £12,000 in 2019/2020 and then to £12,300 in 2020/2021. The tax-free allowance can be used to a deceased person’s estate for the tax year before their death and the two years following their death.
What is the location of the shares?
Whether or not Capital Gains Tax is due is determined by the location of the shares. Other shares, such as ISA or PEPS shares, are not taxed or subject to Capital Gains Tax; nevertheless, other shares are subject to Capital Gains Tax and other taxes. When shares are sold, they may be subject to Capital Gains Tax.
Shares sold during the Probate process
If shares are sold during Probate, the executor or administrator of the estate is responsible for determining whether Capital Gains Tax is required. If the value of the shares has increased after the date of death and they are sold during Probate, any profit made between the date of death and the date of sale in Probate may be subject to Capital Gains Tax.
It is quite difficult to sell shares during Probate, and it must be done correctly. If you’re seeking to sell shares while in Probate, get in touch with us right away for assistance on how to do it properly.
Beneficiaries receive shares that have been transferred to them.
Capital Gains Tax is not due on shares when they are transferred straight to the recipients. If the beneficiaries later elect to sell the shares, they may be subject to Capital Gains Tax on any profit realised from the sale. This gain will be calculated based on the value of the shares as of the date of death, just as it would be if the shares were sold during the Probate process.
Do you need assistance navigating Probate? For professional and helpful advice, contact our specialists today.
If you need more assistance with this process, simply pick up the phone and dial 0203 985 9554.
