Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
May I confirm I understand the position correctly: from what you say do I understand that under the trust your father had a right to the income from the shares but that the share capital itself fell to you and your siblings following your fathers death. The specific point I seek to clarify is that your father had a right to the income under the trust rather than it being a discretionary decision to give him the income on the part of the trustees. Are you able to indly confirm?
Yes our father had a right to the income until his death. This was stated in our Mothers will.
Many thanks. Finally do you know the approximate value of the shares in question? Were there any other significant assets in the trust apart from the shares?
The share value was approximately £120,000. The family home was also left for Dad to live in until his death. We have not started to sell the property as my 2 sisters still live there.
I have to go our shortly to the Doctors. But will be back to you in due course. Thanks for your help so far.
Thanks for the above information. There are two taxes for the executors to concern themselves with. The first is income tax due on the income from the sahre s during your fathers life. Under a life interest trust income tax where your father had a right to the income from the shares during his life your income tax is payable by your father at his own tax rate. The executors will need to ensure that his income tax liabilities are finalised by completing a self assessment form (if your father completed self assessment tax forms) or if income was deducted at source, then an R27 form to finalise the income tax position up to the date of his death. This may already have been done.
The second tax is that which you identify - capital gains tax. The shares to which your father had a right to income are treated for the purposes of inheritance tax as being absolutely his property and valued as such within his estate. In other words, the approximate show value £120,000 should have been included as an asset in his estate in his probate return and inheritance tax assessed thereon. For the purposes now of capital gains tax, an uplift in base value for the shares is allowed under the Capital Gains Tax Act to the value declared in your father's probate return.This means that when you come to sell the shares, capital gains tax will be assessed on each of you on the difference between the value of the shares as at the date of your fathers death and the date the shares are sold. Obviously each of you can deduct any unused annual allowance from any gain to calculate whether any capital gains tax is due
You can either ask the stockbroker to professionally value the shares or you can use an online service to value the same such as the following:
To use the service, you simply enter the quoted company you are searching for and one selected click on the historical share price link on the left-hand side. Obviously the service only works for quoted shares which I assume these are. In the event the unquoted shares, you would need to contact a chartered accountant for valuations
Does the above answer all your questions or is there anything I can clarify or help you with any further?
Joshua, Just to clarify, we each need to fill in a self assessment tax form?
Sorry for the delay in reverting to you.
With regards ***** ***** each of you will need to complete a return but only if you calculate that there is any CGT due having deducted your annual allowances in each case. There is no need to submit a CGT return if there is no CGT to pay
Have I been able to help you with all your questions on the above or I can I help with anything else?
If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though
Joshua, Just one more question and I hope it is the last. What is the difference between quoted shares and unquoted shares?
No problem at all - I am sorry we keep missing each other this evening. Quoted shares are shares that are listed on a stock market - the best know in the UK being FTSE but of course there are hundreds of such exchanges around the world. Unquoted companies are those that are not listed on a stock market - e.g. shares in a private limited company. The link I have given you can only value quoted shares on major stock markets which I assume is what you are dealing with but in they event they are unquoted shares - e.g. shares in a family company or something of like, you would need to seek a valuation from a valuer.
Is there anything I can clarify for you above or does that answer all your questions for now?
Thanks that is everything for now.