On a death, the property of the deceased vests in their Legal Personal Representatives (LPR). The LPR can generally only deal with property once they have established title, that is by extracting a Grant of Probate or Letters of Administration Intestate.
No Capital Gains Tax (CGT) arises on the death as it is not considered to be a disposal, but the date for valuation of assets is the date of death. The current rate is 33%.
If the LPR sells the asset during the course of the administration of the estate, any gain or loss arising accrues to the estate of the deceased and not to any beneficiary. In such circumstances, the LPR will not have the benefit of any personal allowances that might ordinarily arise to a taxpayer and cannot pass any gain or loss to any beneficiary.
If the LPR is disposing of property to which beneficiaries are absolutely entitled, then the LPR should, for certainty, vest the property in the beneficiaries prior to a sale and allow the beneficiaries to sell the property in their own right.
Alternatively, the parties should complete a declaration of trust prior to entering into a contract for sale confirming that the LPR holds the property for the beneficiaries who are entitled beneficially in possession and that it is not held by the LPR in the course of the administration.
1- If the contract for the disposal is executed between 1st January and the 30th November of any year, the CGT due is payable no later than the 15th December following.
2- If the contract for the disposal is executed between the 1st December and the 31st December of any year, the CGT due is payable no later than 31st of January following.
The returns in respect of the gain must be filed no later that the 31st October following the year in which the contract was executed. It is important to note that it is the date of the execution of the Contract for sale that triggers the liability for CGT purposes and not the date the sale actually completes.
In light of the above, it is advisable that LPRs avoid signing contracts late in the year where the sale may not complete before 15th December or 31st January. If LPRs are relying on the sale proceeds to pay the CGT liability, then they should defer the signing of the Contracts until after 1st December or 1st January.