Capital Acquisitions Tax

Tea4me

Hello...newbie here flummoxed by the the the tax system..can't seems to find an answer. I have a question about Capital Acquisitions Tax.
A relative has passed away intestate and so his estate (farmland and house) will pass to his four nephews.
All of the four nephews will be be applicants for grant of probate on the CA24 form
Say the value of the estate is 150,000. Does each of our four Group B thresholds (4 x 32,500 = 130,000) count against CAT with the balance taxed at 33% or is it just one threshold that counts? (32,500) with the balance taxed at 33%. Thanks in advance everyone!

studdlymurphy

1 threshold each and then the leftover is split in 4 and taxed at 33% each

Tea4me

thank you very much for your reply.

So as per my example estate is worth 150,000 we have 4 thresholds of 32,500 which is 130,000 which means 20,000 is subject to CAT split between 4 of us and taxed individually at 33%?

am I right in thinking that in order for this to be the case that all 4 of us must be listed as applicants on the Inland Revenue Affidavit (CA24) form for Probate?

Thanks again!

Peregrinus

CAT isn't levied on the estate; it's levied on the beneficiary.

So, although you have the right answer, you have arrived at it by the wrong methodology. The correct analysis is this:

Value of estate: 150k.

Estate is divided four ways - each beneficiary gets 37.5k.

A beneficiary who is a nephew, and who has never received/inherited other gifts/inheritances, has a threshold of 32.5k. So his tax computation is (37.5k - 32.5k 5k x 33% = 1.67k.

As it happens, this is the situation for all four beneficiaries. But if one of them had received other gifts/inheritances, and so didn't have a full threshhold available to him, or of one of them wasn't a nephew but had a different relationship to the deceased, and so a different threshold, this would affect his calculation but it wouldn't affect the others.

It makes no difference who is listed as applicant. The applicant on the CA24 is the executor/administrator - the person who takes on the job of handling the estate. But CAT is levied on the beneficiaries - the people who receive inheritances from the estate. A beneficiary may or may not be an executor as well, and so may or may not sign the CA24, but either way it will not affect his CAT liability.

namenotavailablE

If any of the existing beneficiaries are already farming or own agricultural property, it's also worth checking whether 'Agricultural relief' might apply- this could reduce the taxable value of their inheritance.

Tea4me

Thank you for your helpful replies - that makes everything a lot clearer for me now