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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My wife died in January & left me two large shareholdings

Customer Question

My wife died in January & left me two large shareholdings valued at death approx£150k
My solicitor following probate has now transferred to my name,the value has increased slightly
Do I have to pay tax if I sell £50ks worth ?
Please advise
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.

Hi.

The costs of the stocks for CGT purposes is what they were worth when your wife passed away. If you now sell them at a profit compared to the probate value, the first £11,100 of gains you make in the current tax year will be tax free and you will pay CGT at 18% or 28% or a combination of the two rates depending on the level of your income. You would need to work out what the CGT cost of £50,000 of the shares you might sell is as a proportion of the whole portfolio to determine the gain.

I hope this helps but let me know if you have any further questions.

Customer: replied 11 months ago.
Thanks for the reply,further question
The gain in value of the holding is at current prices £5000 or 155k against £150k I have also received £ 3000 of dividendpaid since her death from the solicitor I earn after tax pensions & part time work£2700 per month.so presumably I have to pay18% over £11100 or £8100?
If so how do I declare /pay this
My only asserts are my £600000k house & small savings?
Expert:  TonyTax replied 11 months ago.

If you were a basic rate taxpayer in 2015/16 (gross income no more than £42,385), you will have no tax to pay on dividends received in that tax year.

In 2016/17, the first £5,000 of your dividends will be taxed at 0%. To the extent that the balance of your dividends are in the basic rate band in 2016/17, they will be taxed at 7.5%. Any dividends which take your gross income over £43,000 in 2016/17 will be taxed at 32.5%.

You can make £11,100 of gains in 2016/17 tax free. If the share portfolio you inherited has increased in value since January by £5,000 you can sell it all and pay no CGT. CGT is charged at 10% on basic rate taxpayers in 2016/17 and at 20% on higher rate taxpayers in 2016/17.

If you sell the whole portfolio in 2016/17, you will need to complete a tax return after the end of the tax year even if the gains are within the CGT exemption and you have no CGT to pay.

Customer: replied 11 months ago.
Hi again so basically you are saying that can sell all the shares on the information I have given you without any tax to pay in this tax year but next year I would be taxed ?
If I were to delay things
Expert:  TonyTax replied 11 months ago.

You are currently sitting on gains of £5,000 on the shares you inherited. I'm not aware of any other shares you may have. You can make £11,100 of tax free gains in 2016/17 which is more than £5,000. The CGT exemption will be at least £11,100 in the 2017/18 tax year so I'm not sure how you came to the conclusion that you would be taxed in the next tax year. Nobody knows where share prices will be in a year's time so if you kept the portfolio, it might be worth more or less than it is now.

Customer: replied 11 months ago.
Thanks so far busy now until Thurs pm will come back to you then & rate if that's ok
Expert:  TonyTax replied 11 months ago.

OK.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15883
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 11 months ago.
Hi Tony
Thank you for your the information so far,Sorry to repeat but I do need to understand this fully
As I now understand
I am able to sell my wife's shares without tax implications' if they have not gone up in value
If there is any gain in value since her death this would be subject to CGT if this exceeds the limit
If I sell part of her portfolio it there would be no tax to pay unless the individual share price has gone up& my gain exceeds the limit.
Finally is there a timescale for me to liquidate some shares?
Expert:  TonyTax replied 11 months ago.

All your assumptions are correct. There is no time limit by which you need to liquidate your late wife's shares.

You can sell your wife's shares for whatever they were worth at probate plus £11,000 (the annual CGT exemption) provided you don't makes gains on any shares or property you own yourself in the same tax year.

Customer: replied 11 months ago.
Hi Tony
Thanks for this
Will now rate
Regards
Mike
Expert:  TonyTax replied 11 months ago.

You already have.

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