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bigduckontax
bigduckontax, Accountant
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Can you please advise? My partner sold s shares on the 22nd

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Hello
Can you please advise?
My partner sold his shares on the 22nd August 2011.
He paid the disposal in full @ 10%.
He did not pay capital gains tax in instalments.
My partner did not realise the full gain of the sale as he was being paid in instalments over a 10 year period.
My partner died February 2013.
After my partners death the estate paid the full inheritance tax on the balance of the shares.
Can you clarify that the payments made in advance from the period of my partners death until the final instalment should be refunded.
I was sole beneficiary and executor.
Submitted: 7 months ago.
Category: Tax
Expert:  bigduckontax replied 7 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Pleae expand on 'He paid the disposal in full @ 10%.' Do you mean that he paid Capital Gains Tax (CGT) at the Entrepreneurs' Relief flat rate of 10%.?

Customer: replied 7 months ago.
Hello Keith
Yes, that is what he did.
Expert:  bigduckontax replied 7 months ago.

My first wry comment is what a pity you didn't marry then the inheritance would be inter spousal and there would be no Inheritance Tax (IHT) to pay!

The fact that your partner was being paid in installments is irrelevant as the gain crystalised at the time of sale. From the tenor of your question not all the shares were sold in 2011, some were left over and part of his estate on decease. In any event this is irrelevant as there is no CGT on death, all assets being aggregated and any surplus over 325K [increased by any inter spousal or charitable bequests] exposed to IHT which is at a flat rate of 40% on the surplus. If the deceased's estate is bequeathed at 10% or over charitably the rate drops to 36%.

I can see no reason for refund. On death the amount outstanding from the buyers of the shares would form an asset which the executors are duty bound to collect before distribution.

You may wish to come back to me on this one if I have misinterpreted the question.

Customer: replied 7 months ago.
Hello Keith
Thank you, ***** ***** engaged but very sadly he became really ill and died within 2 weeks. .
All of his shares were sold in 2011.
The CGT was paid from our joint account on the full sale value. The gain did not crystallise at the time of sale, the money from the share sale was to be paid back over 10 years, the CGT was paid in full in 2011, he died 2 years later.
I inherited what my partner hadn't received and paid 40% IHT.
In addition to this my partner had a personal tax liability at his death of nearly £100K, which the estate (me!) had to pay.
Kind regards
Lynne
Expert:  bigduckontax replied 7 months ago.

I am sorry to have to tell you Lynne, but in tax law the gain does crystalise as at the date of disposal ie in in 2011. Your partner would have had a tax liability then which he apparantly settled at the Entrepreneurs' Relief level of 10%. Your partner's personal tax liability of nearly 100K was payable from his estate and if this was insufficient to meet this liability then it is hard luck for HMRC. In any event the outstanding debt would have reduced his IHT exposure. You say you paid it, yet you have no liability in this matter.

I regret that this looks like a terrible mess. Who handled the IHT position at decease?

Customer: replied 7 months ago.
Good morning Keith
The IHT was handled by DWF solicitors.
I believe my partner had an option, given he was to receive the proceeds of the sale over 10 years he could have chosen to pay CGT over 10 years. This is one of the reasons why I thought he was due a rebate. There is more similar instances re tax but this one was my concern.
Kind regards
Lynne
Expert:  bigduckontax replied 7 months ago.

Well he could have applied to HMRC to pay the CGT by installments, Lynne. He would still have been entitled to Entrepreneurs' Relief. However he did not so elect. He had a CGT liability as a result of the sale, the outstanding balance thereof would be an existing debt at the time of decease and would have to be cleared before distribution. I am sorry, but I can see no grounds for a rebate in this matter unless the executor failed to take the tax debts into account and rolled them into the estate which frankly appears unlikely.

I am so sorry to have to rain on your parade.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3356
Experience: FCCA FCMA CGMA ACIS
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Customer: replied 7 months ago.
Thank you Keith
Don't worry it has been pouring on my parade since 2013!
It is what it is, thank you for clarity of the situation.
Kindest regards
Lynne
Expert:  bigduckontax replied 7 months ago.

Thank you for your support.

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