Letter from Revenue and Customs re Capital Gains Tax

[Nitgel]

I will call them tomorrow but if anyone could advise it would be good.

I sold my dad's house in May. It was valued at 440 at probate and we sold for 435, literally no profit made. I just received a letter to say I may nee to pay capital gains tax on the sale. However the letter has my name address, national insurance number but a completely different house to my dads. (though in the same town).

I didn't think I needed to let anyone else know after the sale and the conveyancer didn't say anything about CGT form etc. I am not self employed.

Any advice as these things always happen on the weekend.

I thought when someone died the estate paid Inheritance Tax and not Capital Gains Tax as well - that would be double taxation?! Together that could potentially be 68% tax and after this next Budget - what??

The house was part of the estate of a person who died.

At death any CGT liability is discharged but IHT might fall due instead. At that point the CGT clock restarts but with the start point being value at death, ie probate value, rather than acquisition.

If the difference between eventual sale price after expenses leaves the estate in profit CGT is a possibility.

In this case OP says it sold for less than probate so, unless HMRC suspect jiggery pokery with valuations then no CGT.

Since the property address is wrong I suspect a cock up. OP will need to engage with HMRC and sort this out.

I cannot see a plausible scam on the facts asserted by the OP.

The OP sold a house she had inherited. She sold it when it was her property hence CGT potentially being due. But in this case it isn't anyway because she sold it at a loss.

I would try and get something in writing from them. Maybe using their chat function inside your govt gateway tax account.

my experience of HMRC has been they are ok on simple queries but anything complicated, oh my good god, -advice often contradictory and plain incorrect. I’m still waiting for a response to a letter I sent them in January 2024….

I will definitely try to get something sent to confirm anything said.

Can also note down what they say, add time of call and date and who you spoke to if they give a name. Some government services where I live will provide a receipt number for the call if asked too, I don't know if HMRC do, could be worth asking.

If it says you may need to pay CGT it sounds as if they have just become aware of the sale and have no record of any notification. If you explain you didn't make a profit and have the paperwork to prove it that should be the end of it.

I don't know what happens in these cases but it could be HMRC are notified of houses sold during/after probate and if they don't have any information follow it up routinely to make sure any CGT owed is paid.

a probate solicitor may well mention it but your post that i replied to was
"Your conveyancing solicitor, knowing this was probate, didn’t once mention CGT?"
So you appear to be confusing probate with conveyancing. It is not a conveyancing solicitors job to advise on any possible CGT implications of a sale.

It is perfectly obvious that there are 3 people on this thread who know what they are talking about and you are not one of them

The amount payable depends on your tax band too.

Ensure you deduct all the costs to sell the house like the solicitor's costs.

£3000 or less gain you can usually avoid paying anything if there are no other gains that year.

You can pay inheritance tax and capital gains in some cases. We inherited a house and moved into it. It became our main home and therefore not liable for any CGT despite major building works. It depends on the situation.

Well in this situation it relates to a house that has nothing to do with either the OP or her late relative, so there's obviously a mistake somewhere along the line.

OP - I'd definitely speak to HMRC because they have quoted your NI number, and it could be that someone else is using your NI fraudulently in connection with that address. I once went online to fill in my self assessment tax return and discovered that my address had been changed to one I'd never heard of elsewhere in the country. That took some sorting out.

Urgh 20.minute wait then gave the real person my NI insurance number then thank you for calling message and cut-off.

Oh how annoying. They really are a nightmare to contact.

They are a nightmare. Try the webchat instead it's usually a bit better.

i finally got through but the person kept asking a 'technician' for advice. He then told me to write to them.

Wrong. When a property is inherited the base cost for capital gains tax purposes is the probate value, ie the market value of the property at the time of death. Depending on the size of the estate inheritance tax may have been payable but this would have been paid from the estate before full distribution to the beneficiaries.

If the property inherited is then sold capital gains tax is payable on the gain over and above the probate value.

If the property is sold for more than the market value at death, capital gains tax is potentially payable on this gain. Inheritance tax would apply to the value on death but only if the estate is worth more than the IHT tax free band.