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bigduckontax, Accountant
Category: Tax
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My Grandmother's estate sold some land after her death and

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My Grandmother's estate sold some land after her death and I received my share of the proceeds according to her will. I was advised at that stage that the revenue was an inheritance. The terms of sale allowed for the vendors (the estate) to benefit if and when there was an uplift in value due to planning permission being granted. This situation has now occurred and I have been advised that the income should be declared.
Is this a capital gain or normal income?
Mark Read
Hello Mark, I'm Keith and happy to help you with your question.
This distribution is by the executors. They are responsible for meeting any Inheritance tax (IHT) dues on the estate before distribution is made. IHT does not kick in in any event until an estate exceeds 325K plus inter spousal and charitable bequests.
Here is advice from Wilkins Kennedy Chartered Accountants and Business Advisers:
'Before Executors or Administrators make a sale they should considered whether it is worthwhile transferring ownership of the asset to the beneficiaries who are to share in the proceeds. Provided the asset is ‘assented' (a form of legal transfer) to the beneficiaries before the sale takes place, any gain arising will be split between them, thereby offering the opportunity to utilise more than one Annual Exemption.'
If this is then situation then it is a capital gain and you have an Annual Exempt Amount, currently 11.1K, 11K last tax year, to offset this gain. Any surplus will be taxed at 18% or 28% or a combination of the two rates depending on your income including the gain in the year of sale.
I do hope that I have helped you with your conundrum.
Customer: replied 2 years ago.

Thank you for your response.

The land was sold some years ago and the sale agreement contained a clause allowing the beneficiaries to share in any gain in value resulting from the obtaining of planning permission in the future. This event has now taken place and the total gain shared among a number of us is c. £12k. My share is about £1200. Is this a capital gain?


Mark Read

Yes it is, but it is well below your Annual Exempt Amount of 11.1K (11K last tax year) so you will have no tax to pay unless you have extensive capital gains elsewhere in the relevant tax year.
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