Calculating CGT when gifting half after inheriting half

I'm trying to work out the amount of CGT liable on a gift of a half share of a buy to let, and how to calculate the liability. Mother and her daughter (A) owned a flat as tenants in common. When the mother died in 2019, the property was inherited by/went into the names of the daughter (A) and her husband (B), as joint tenants. So the husband B inherited half of the buy to let in 2019. Property was then valued at £500K. In 2023, A died, leaving her half to her husband B. So B then inherited the other half. Valuation at time of the 2nd 2023 probate was £440K. - so had gone down. No in 2024, B wishes to gift half the property to his daughter, to hold as joint tenants. So, 50% share each. A red book valuation ahs been taken of the current value, and that is saying £480K. So, in between the two values. Transfer/legal fees been £810, and none of the £3K CGT allowance has yet been used. Upper rate tax-payer. Bearing all the above in mind... would I be right in thinking that despite the 2nd probate valuation on the death of the wife (A) was irrelevant for IHT purposes as the husband inherited her estate, and was an estimate, nonetheless that must be taken into account for the inheritance of the second half? Therefore the calculation would be: 50% of £480 less 50% of £500K for the first half (= a CGT liability of MINUS £10K) plus 50% of £480K less 50% of £440K (= liability of £20K) So, £10K. Then he's only gifting half, so that would be £5K liability. Then deduct the £810 fees and £3K allowance, leaving a CGT liability of £1,190 to be paid. Would this be right? Thanks very much for any help!

- sorry, and then it's 24% of that £1,190 that then needs to be paid to HMRC? And would the fees for the transfer be taken from the £5,000, as it's the cost of the entire transaction, or from the £10,000, as only half is being gifted?

Hi,
 

From your details, the share of the property when the mother died would be her 50% so then A would own 75% and B would own 25%. When A died B then became 100% owner.  Purchase price is then 25% value in 2019 and 75% value in 2023 and based on your figures this would then be £425k. With current value of £480k, there is a gain due of £55k. As its only half the property being transferred then this would be £27.5k minus any expenses and the annual allowance . Thank you .

Many thanks for the reply. I think the value would be £455K based on the figures rather than £425K? However, when B inherited in 2019, the Form A restriciton was removed and he inhertied it as joint tenants with his wife A, so presumably the calculation, as joint tenants to sole owner, would be 50% of the 2019 value pkus 50% of the 2023 value, to get to the purchase price? Which would give a purchase price of £470K - so a gain due of £10K. Gifting half then means a gain of £5K. Does this sound correct? And please could you confirm that the fees and annual allowance would be taken from the £5K, rather than taking it from the full potentail liability of £10K first, and THEN dividing by 2? So, 24% of £1,190? (£285.60 total CGT)? Thanks!

Hi,

Thank you for clarifying the right split.

Yes, a gain of £1000, so as only half is being transferred, your gain is £5000 and from that you deduct the fees and annual allowance.

Thank you.