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Original poster

Tax - capital gains, income or inheritance?

63 replies

Twiglet2015 · 23/01/2015 20:35

If a property years ago was brought with the intention of renovating and selling but instead was let out after renovations. The property is then left to someone in the will. What tax will be paid once the original owner passes away.

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florencedombey · 23/01/2015 21:19

If the house belongs to the company and the will leaves the company shares to your brother he will get the house. Are you saying that your mother's will purports to leave you a house which she didn't actually own (because it was in the co)?

If so, one possible route would be a statutory will application to the Court of Protection to have the will amended. However, if your brother is likely to challenge the application, it will be expensive. You need to take some proper legal advice from a solicitor.

YonicScrewdriver · 23/01/2015 21:22

Are you doing this from memory of a sight of the will or were you able to take notes?

Original poster
Twiglet2015 · 23/01/2015 21:25

Just memory. I wish the solicitor would let me see the will it would take away all the speculation. I don't want to be fighting when she passes.

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Original poster
Twiglet2015 · 23/01/2015 21:26

Yes she is the sole owner. The rent gets paid straight into her bank account which I manage.

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KristinaM · 23/01/2015 21:27

Who is administering the company at the moment?

YonicScrewdriver · 23/01/2015 21:28

Does she pay income tax on that now?

NitramAtTheKrap · 23/01/2015 21:28

Oh I am sorry, this all sounds horrible and messy and stressful.

Where does the 40% income tax come into it? If the company owns it it will be paying corporation tax at 20% and your mum income tax on dividends or the salary she takes from the company.

If the company sold the property it will still pay corporation tax at 20% on the gain and again mum pays income tax on any div/sal.

sunnyfrostyday · 23/01/2015 21:32

I don't think you're going to get a clear answer here, I'm afriad. The solicitor is unlikely to let you see the Will (I wouldn't), a statutory will is a possibility, but that would be Court of Protection stuff. Another possibility could be to challenge the Will on the basis that your mum intended to give the property to you, or that the company actually held it on trust for your mum and she owned the beneficial interest.... very complicated if your brother will not cooperate.

Original poster
Twiglet2015 · 23/01/2015 21:32

The tax return has been completed and she's paid 40% tax on the rent (minus any letting fees and maintenance etc). I'm clueless with tax and am going by what the accountant has told me. Every time I call him he charges me!

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Original poster
Twiglet2015 · 23/01/2015 21:34

I deal with all the finances including the property/ company. I don't really know what I'm doing Sad

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Original poster
Twiglet2015 · 23/01/2015 21:36

Thank you all by the way for your help so far. Smile

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Original poster
Twiglet2015 · 23/01/2015 21:37

She's not paying any corporation tax that I can see.

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NitramAtTheKrap · 23/01/2015 21:38

Are you absolutely sure the company owns this property? Because if your mum is paying tax on the gross rents, that's not right. If she is paying tax on the dividends or salary from the company derived from the net rent paid to the company on which the company has paid tax, that's a bit different.

This is costing you £200 + VAT per hour by the way Wink

KristinaM · 23/01/2015 21:39

It must be a very expensive property if the rental income reaches the higher rate tax bracket !

Do you do all the paperwork for the company as well, or only on the house?

I don't understand why the rent is paid into your mothers personal account if it actually belongs to a company .

Does the company have any other trade or assets ?

Original poster
Twiglet2015 · 23/01/2015 21:42

Do you accept Biscuit Wine instead?

I queried why he didn't tick the income from rental properties on the tax return and he told me it was because the company owned it and not her?

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sunnyfrostyday · 23/01/2015 21:42

Have you seen the deeds? Does it actually say the company name? Is it a limited company? this just doesn't sound right.

Original poster
Twiglet2015 · 23/01/2015 21:44

She has a private pension that pushes into the upper tax bracket. No the company has no other assets. He said I can't dissolve the company as it would cost too much to do now.

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Original poster
Twiglet2015 · 23/01/2015 21:46

The company used to belong to my dad buying and selling properties. When he died it was left to her. She is absolutely clueless (more than me lol) when it comes to finances so just does what the accountant tells her. I was doing the same but I want to understand it as it's confusing me!

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NitramAtTheKrap · 23/01/2015 21:46

Which section of the tax return did this go in and sorry to ask again, but is this accountant qualified in some way or not?

Original poster
Twiglet2015 · 23/01/2015 21:46

No I've not seen the deeds but I can access them. Would that be helpful?

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Original poster
Twiglet2015 · 23/01/2015 21:47

Yes he's qualified. I'll just check.

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FishWithABicycle · 23/01/2015 21:50

you can check who is the actual owner of the house by paying a small fee on the land registry website.

If the company owns the property then it may be that the rent is nominally something that needs to go through the company's balance sheet (and the company will pay tax on the income too)

Original poster
Twiglet2015 · 23/01/2015 21:52

Ok under the company name it says nil for payments. Under self employment it says name:, description of business: property developer, business income *

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Original poster
Twiglet2015 · 23/01/2015 21:52

Even more confused now.

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Original poster
Twiglet2015 · 23/01/2015 21:54

I presume he's qualified he's part of a company and says chartered accountant under his name. I'm more worried about me being left nothing now as that didn't even occur to me before I wrote this thread!

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