M
y mother died last year and I have been settling her estate with help from my brother-in-law. It was relatively simple: she had some investments and a mortgage-free house. But it has been time-consuming. Filling in all the paperwork took us an entire day, and we are professionals (he is an accountant and I am a retired judge). Even then we had problems because HM Revenue & Customs (HMRC) gave us different information about what tax we should pay.
After probate was granted in October, we spoke to two estate agents who estimated that the house was worth £550,000. We told HMRC this was the probate value and we also put it up for sale at that price.
Several months later we ended up selling the house for £627,000. We sent a form to HMRC to correct the probate value to the sold price. We then calculated the inheritance tax (IHT) due as roughly £27,800 and immediately paid HMRC to avoid any interest charges. But then HMRC wrote to us to say that we should pay capital gains tax (CGT) instead. We were convinced that this advice was wrong, so we each called HMRC separately, but were both told that we should pay CGT.
HMRC then sent a CGT calculation saying we owed £14,965, which we paid. We then asked HMRC to return the IHT payment. Twice we were told that the refund was in progress but that was weeks ago and we still don’t have it.
