My understanding is that you can claim a 10-15% joint ownership discount. IHT400 notes say you can claim a 10% discount, whereas I can see on forums, some advisors are claiming 15%. What is the rationale for the additional 5%?
The estate I am acting for is in dispute. The land qualifies for APR and the son of the deceased (who already owns 50% of the farm) is claiming the deceased should have left her whole estate to him - estoppel essentially.
We are applying for probate, and assuming the Will proceeds, it will mean the Farm will need to be sold. If so, my understanding is any CGT is hedged on the probate valuation submitted to HMRC. Accordingly, I’d rather not claim any joint ownership exemption because the assets qualify either for APR or are within the deceased’s NRB / RNRB / TRNRB.
Would I be doing something wrong if I do not claim this relief in order to bump up the value of the property in future in case it sells for more than the probate value? I have no idea what it may sell for, or even if it would be sold, but it seems prudent to think of every eventuality…
The value disclosed for IHT is only applicable as the executor’s or beneficiary’s CGT acquisition value if it has been “determined” (s.274 TCGA 992)– i.e. agreed with HMRC for IHT purposes, which will normally only happen if IHT is payable.
Where no IHT is payable, if the value disclosed is based upon professional advice the executors/beneficiary may reasonably adopt this as the basis for any CGT calculation and await argument from HMRC, which may take advice on the claimed acquisition value from the relevant District Valuer. Whether, or not, you claim the discount for joint ownership, HMRC may well apply it in any event.
Whilst CGT is payable at a lower rate than IHT, it would seem preferable to secure a capital gain than incur IHT (although HMRC might take a different view).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
