Last updated on March 7th, 2023 at 11:42 am

It can be a daunting job, especially during an already difficult and often stressful time.

Legal, administrative and tax duties can be substantial, and it is probably best to get help from a professional probate lawyer, as the personal representative can be personally liable if mistakes are made.

As a personal representative, your first step is to ensure that you have permission from the courts.  Most personal representatives will need to apply for a grant of probate (if there is a will) or letters of administration (if there is no will).  You will need to estimate the value of the estate and decide whether inheritance tax (IHT) is due before applying for probate.  If IHT is due, you will need to wait 20 weeks before applying for probate.  The government indicates that granting probate is taking around 16 weeks at present – providing no additional information or further documentation – such as affidavits – is needed.   There is a fee of £273 for estates of over £5,000 and no fee for estates of less than that.

Head of Graysons’ private client team, Laura Cowan, says:

“Calculating and reporting taxes owed can be especially complex, particularly on higher-value estates.  However, changes to take place in April 2023, following the autumn budget, will mean that more estates will become liable for tax. Whilst there will be no changes to inheritance tax, where it must be paid on all estates over the deceased’s nil rate band (NRB) of £325,000 and the residence nil rate band (RNRB) of £175,000 (where applicable), a reduction in the capital gains tax (CGT) threshold is likely to have a significant impact.”

CGT is payable on any profit made by the estate, that is the difference between the value of the assets at death and their value at disposal – less any costs related to the sale of the assets.  At present, an estate has a CGT allowance of £12,300 per year.  That means that if the estate makes a profit of less than this from the disposal of assets, no CGT is due.  The allowance for the first year runs to the 5^th April – irrespective of the date of death.  There is then the same allowance for the two years following death – but allowances cannot be rolled over.  However, following the budget, the allowance is set to reduce in April 2023 to £6,000 and then again in April 2024 and for subsequent years, to £3,000. This means that many more estates will become liable for CGT from April this year. If assets are passed onto beneficiaries before they are sold, the liability for CGT moves to that person.  For charities, which are exempt from CGT, this is likely to mean more work, as they must reclaim any CGT already paid by an estate.

It is important to note that the current rate of CGT on chargeable capital gains on residential property is either 18% for lower taxpayers or 28% for higher taxpayers.  The rate for tax on chargeable capital gains on any other asset is 20%.

Where a significant amount of CGT is payable or assets of a significant value are sold, a trust and estate tax return must be completed.   You must also report to HMRC the estate income from the date of death until everything has been passed to the beneficiaries (other than in certain exempt circumstances).

Graysons’ complete administration service means that we can help you from the very minute you take on the responsibility of being a personal representative to the point of distributing the assets.  Our advisors are particularly expert at dealing with IHT and CGT issues, taking the stress of calculating and reporting tax away from you.   Contact our friendly experts now to make an appointment.

Find out all about making a will.

Author: Laura Cowan, head of Graysons’ private client department.