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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
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I inherited a 25% share of a property from my father when he

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I inherited a 25% share of a property from my father when he died. My sister also inherited 25% of the same property. She has been buying my share since 2008 when she moved into the property. She has one payment to go. The 25% share has increased from £100k to £203,125 and so there is a gain of £103,125. Please could you tell me whether I have to pay Capital Gains tax, how much and when it is due?
Thank you
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Technically, you should have reported the gain on every occasion you transferred a percentage of your share of the property to your sister unless the agreement was that property would be transferred on receipt of the last instalment and that date is now.

If you have lived in the family home all the time as your main residence (from when it was transferred to you on the demise of your father) then you would be able to claim private residence relief against your share of the gain.

If on the other hand, this is not your main residence and it is a second home/investment property, then the gain would be chargeable to CGT. You would get gains annual allowance against it and the balance would be chargeable to CGT at 18%, 28% or a combination of both depending on your total income in the year of sale.

Here are some calculations assuming the whole gain is chargeable to CGT

CGT calculations
Sale proceeds£203,125
Cost price£100,000
Potential capital gain£103,125
Tax year 2013-14
Gains chargeable to CGT103,125
Annual Gains exempt allowance10,900
Chargeable gain92,225
CGT calculation
If income after personal allowances is >£32,010
then CGT on gain is taxed at 28%£25,823
If income after personal allowances is less than
£32,010 then some gain will be taxed at 18%
and the balance at 28% - see example below
Assume income after allowances is
(20,000-9,440) = £10,560
Chargeable gain taxed at 18%21,450
Chargeable gain taxed at 28%70,775
CGT£23,678

 

 

Due date of payment of CGT is outlined under Key deadlines of "What to report to HMRC for Capital gains Tax" here

http://www.hmrc.gov.uk/cgt/intro/report-gain.htm#6

 

 

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.



taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4803
Experience: FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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