IHT CGT and Deed of Appropriation

My aunt died June 2023 and she left her flat and estate to her 3 beneficiaries. For probate an estate agent valued the flat at £260k, and we submitted this value for Probate. IHT was paid and Probate was subsequently granted in February 2024. When putting the property on the market, we accepted an offer of £245K, then the freeholder offered £300K for the surrender of the lease. I believe we may be liable for CGT. Is this increase in property value since date of death and probate, dealt with by Inheritance tax or by Capital Gains tax? As the Executor and a beneficiary I am considering a Deed of Appropriation first so that when the flat sale completes the 3 beneficiaries all get an equal share and we pay our own CGT if applicable? We are all basic rate taxpayers. I am asking this as I am getting differing information from various people, Would the Deed of Appropriation also have to include the Estate? That way the CGT and expenses would be split 4 ways and there would be 4 x CGT allowances. I understand the Deed would have to be signed before the sales completion.

Hi motherbear,
This would be taxed under Capital Gains.
The deed can apply to just the house.
The Deed of Appropriation would need to be signed and dated before the asset is sold. This would mean that the asset was no longer held by the Estate, but instead held on behalf of the Beneficiaries. By selling the asset in this way, the Beneficiaries can utilise their own annual tax-free allowances, provided they have not made any other chargeable gains in that tax year.
Thank you.

Thank you not sure I understand the Deed of Appropriation applying to just the house - how does that work? Would all 3 of us have to sign the deed or just me as the Executor. Time is short as I have only just discovered about CGT and deed of appropriation.

If the Deed of Appropriation was against the Flat/ House what would be the rate of CGT ? 28% as for the Estate or 18% as for the basic rate tax payers would the Deed name all 3 beneficiaries? I wonder if there is an example anywhere?

Hi motherbear,
You would need to specify on the deed of appropriation that it applies to the house only and the document needs to be suigned by all parties concerned.
You should discuss this further with a solicitor.
Thank you. 

Hi motherbear,
If you get the deed sorted before the sale then it is the beneficiaries and 18%.
You can use a search engine for examples of a deed.
Thank you. 

Hello as the sole executor I will be paying the CGT on the increase in the property value . Aunt died in June 2023, property sold in August 2024. I read about being able to use the allowance for both years since death? combined total of £9,000 ?............ "If you’re acting as an executor or personal representative for a deceased person’s estate, you may get the full annual exempt amount during the administration period. The administration period is the time it takes to settle the deceased person’s affairs, from the day after the death until the date everything has been passed on to beneficiaries. You’re entitled to the annual exempt amount for the tax year in which the death occurred and the following 2 tax years. This means one annual exempt amount against gains in each of those years. After that there’s no tax-free allowance against gains during the administration period." Tax year Annual exempt amount for individuals, personal representatives 2024 to 2025 £3,000 2023 to 2024 £6,000 Also I am a non tax payer how does this affect what to pay? would the Estate be described as a ‘simple’ estate?.... "Report tax owed in the administration period simply by writing to HMRC (known as ‘informal arrangements’) if all of the following apply: the estate was valued at less than £2.5 million when the person died the total Income Tax and Capital Gains Tax due is less than £10,000 you did not sell more than £500,000 worth of assets in any single tax year during the administration period" Is it best to just write to HMRC with all the details rather than completing the online form? Thankyou

Hi,
You are only due the capital gains exemption in the year the asset is sold. The guidance you are referring to is to let you know that as executor, you are allowed to claim the allowance for a limited period of time to allow you to finalise the estate.
Selling this year would mean only £3000 exemption is due on any gain made so if any tax is due you still need to report this:
Report and pay your Capital Gains Tax
For any other income received in the period of administration, you can write in with the details.
Thank you

Regarding allowable incidental expenses for disposal of the property: understood - solicitors and estate agents fees . EPC required for sale . Buyers Pack required by solicitor . Cost of applying for probate Can I also include : Cost of clearing the property to sell it? Cost of transport to location of property to instruct sale? phone and postage costs? cost of Registering the death -necessary for probate? Inheritance tax paid on property value % of the Estate? daily standing charges cost of gas & Electricity Utilities which must be paid on the property? cost of certifying the will? Any other allowable costs or expenses I have incurred as executor disposing of the property? Thankyou

Hi,
In short, no. Those costs you mention are incurred by the deceased estate. For capital gains purposes, CGR5250 defines the allowable costs of acquistion and disposal, that must have been incurred wholly and exclusively for the purposes of the acquisition or disposal.
CG15250 - Expenditure: incidental costs of acquisition and disposal
Thank you.