Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Rhyd6,87investor,longview,Sussexlad, for Donating to support the site

CGT & Imminent Death

Practical Issues
Raheen
Posts: 8
Joined: April 14th, 2019, 4:05 pm
Been thanked: 1 time

CGT & Imminent Death

#332195

Postby Raheen » August 10th, 2020, 4:38 pm

Bill & Mary both have large portfolios of shares that have built up over many years thru' their taking dividends as new shares.
If either of them sell today there will be a big CGT hit as well as the difficulty of going back over the years to establish the acquisition values.

Although Bill is very ill, he can take lucid decisions on the portfolios. He explains to Mary that as his death is imminent she
should transfer all her shares to him. Soon after the transaction, he dies & the shares, both his and hers go back to Mary under the terms of his will.
Both her transfer to him & the transfer back are free of both CGT & IHT, since it's between spouses.

Will this plan rebase the value of Mary's shares to what they were worth at Bill's death?
If so, could she now sell them with little or no CGT.

scrumpyjack
Lemon Quarter
Posts: 1238
Joined: November 4th, 2016, 10:15 am
Has thanked: 84 times
Been thanked: 472 times

Re: CGT & Imminent Death

#332209

Postby scrumpyjack » August 10th, 2020, 5:42 pm

Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.

This is one of the things the OTS suggested should be changed, ie where there is no IHT assets should transfer at original cost rather than probate value

JonE
Lemon Slice
Posts: 357
Joined: November 11th, 2016, 11:35 am
Has thanked: 20 times
Been thanked: 89 times

Re: CGT & Imminent Death

#332232

Postby JonE » August 10th, 2020, 7:18 pm

scrumpyjack wrote:Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.
Does possibility of 30-day matching of her acquisitions with her prior disposals not apply?

Cheers!

Lootman
Lemon Half
Posts: 7900
Joined: November 4th, 2016, 3:58 pm
Has thanked: 66 times
Been thanked: 1401 times

Re: CGT & Imminent Death

#332234

Postby Lootman » August 10th, 2020, 7:25 pm

scrumpyjack wrote:This is one of the things the OTS suggested should be changed, ie where there is no IHT assets should transfer at original cost rather than probate value

I am in two minds about that.

On the one hand it is ridiculous that spouses should have to jump through such hoops in order to preserve the long-established principle that spouses can structure their affairs to minimise tax.

On the other hand, closing this "loophole" would just cause spouses to have to jump through even more artificial transactions to maintain their tax position.

JonE wrote:
scrumpyjack wrote:Yes her base cost will be the value at the date of his death and she would only pay CGT on the increase in value from that date.

Does possibility of 30-day matching of her acquisitions with her prior disposals not apply?

Does the 30-day rule apply to gifts as well as purchases and sales?

I would have thought that any transaction that is tax-free (which transfers between spouses are) would not be subject to the 30-day rule just like, say, bed-and-ISA transactions are not.

scrumpyjack
Lemon Quarter
Posts: 1238
Joined: November 4th, 2016, 10:15 am
Has thanked: 84 times
Been thanked: 472 times

Re: CGT & Imminent Death

#332448

Postby scrumpyjack » August 11th, 2020, 4:13 pm

Raheen wrote:Bill & Mary both have large portfolios of shares that have built up over many years thru' their taking dividends as new shares.
If either of them sell today there will be a big CGT hit as well as the difficulty of going back over the years to establish the acquisition values.

Although Bill is very ill, he can take lucid decisions on the portfolios. He explains to Mary that as his death is imminent she
should transfer all her shares to him. Soon after the transaction, he dies & the shares, both his and hers go back to Mary under the terms of his will.
Both her transfer to him & the transfer back are free of both CGT & IHT, since it's between spouses.

Will this plan rebase the value of Mary's shares to what they were worth at Bill's death?
If so, could she now sell them with little or no CGT.


She should only transfer to him shares showing a profit. If she transfers shares showing a loss, the loss will be lost for CGT purposes on his death. Also he should transfer to her any shares of his showing a loss, so she can use the loss in future, otherwise similarly the loss is lost.


Return to “Taxes”

Who is online

Users browsing this forum: No registered users and 3 guests