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My wife and I, who are UK residents, are about to buy a house

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My wife and I, who are UK residents, are about to buy a house for £2.1 million pounds and intend to put it in our two names and our two sons (total four joint owners). If say the house increased in value to say £3 million pounds and we died on the same day, what would they each pay in;
i) Capital Gains Tax; and
ii) Inheritance Tax.
Also would you please advise on if the £325k per every seven years is affected by including our sons as joint owners.
many thanks
Mike McCrory
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I'm Keith and happy to help you with your question.

There is no Capital Gains Tax on death. All assets are aggregated together on decease and subject to Inheritance Tax (IT). For the purpose of this answer I will ignore the legal principle involved that if they all die at the same time the eldest is deemed to have died first and so on. Furthermore the problem of inter spousal inheritance has also been omitted. I have, however, added a note for information.

On 3M the IT would be as follows: First there is 3M / 4 = 750K each. The first 325K is tax free leaving 425K exposed to IT at a 40% flat rate equating to a bill of 170K each.

Please remember that this data could be extensively changed. If Dad is deemed to die first and all his cash go to Mum then there is no IT. When she dies then she inherits his unused 325K together with hers to give 650K of relief. Further down the line Quick Succession Relief is also available. You can see we are getting into deep tax waters here, my information was just to give you an idea of the complexities an executor might face.

However, you have the answer for which I think you were seeking, 170K of IT each. I do hope I have helped you and shed some light on your question.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3372
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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