Additional Tax Relief available for Executors Selling an Asset from the Estate.

When an estate asset is sold by the executors during the period of administration, the costs of sale can be deducted to reduce the capital gains tax charge.

Typically these costs consist of dealing commission in the case of shares or unit trust holdings and estate agent fees and legal fees in relation to sales of land or property.

It is also possible for the executors to claim further costs to cover the expense they incur in ‘establishing title to the asset’.

The actual costs incurred can be claimed or alternatively a fixed cost determined by HM Revenue & Customs.

A table of these fixed costs is set out in HM Revenue & Customs Statement of Practice SP 02/04.

View Table

The cost which is allowable is based on the gross value of the estate and is either calculated as a fixed percentage of the probate value of the asset sold, or is calculated as a fixed sum apportioned between the value of the assets sold by the executors. The method of calculation depends on the overall value of the gross estate.

This often ‘forgotten’ about deduction is a valuable tax relief and is all the more important following the the reduction in the annual CGT exemption from £12,300 to £6,000 effective from 6 April 2023.

For more information about mitigating the CGT liability when administering an estate, contact The Tax Angel on 0191 809 0204 or at [email protected].