Introduction

Navigating the world of taxes can be complicated, especially when it comes to inheritance-related taxes. Many people wonder if capital gains tax accountants are the right professionals to assist with inheritance tax matters. The short answer? They can be, but it depends on the situation. This article will break down their role, how they can help, and when you might need a specialist in inheritance tax instead.

Understanding Capital Gains Tax and Inheritance Tax

Capital gains tax (CGT) is the tax levied on the profit made from selling assets like property, stocks, and valuable items. If the asset has increased in value since you acquired it, the gain you make is subject to taxation. Inheritance tax (IHT) is a tax imposed on the estate (money, property, and possessions) of someone who has passed away. In many countries, there are exemptions and thresholds that determine whether an estate is subject to IHT.

The Role of Capital Gains Tax Accountants in Inheritance Matters

A capital gains tax accountant can evaluate whether an inherited asset is subject to CGT when sold. They help determine the asset’s original value (known as the “basis”) and calculate the tax liability. If you plan to sell an inherited property or shares, a CGT accountant can advise on the best time to sell to minimize tax liability. They may recommend waiting to benefit from tax allowances or structuring the sale in a tax-efficient manner.

Helping with Probate and Estate Valuations

Capital gains tax accountants in the uk  work alongside probate specialists to value the estate properly. A correct valuation ensures that the estate pays the right amount of tax and avoids penalties. Some assets qualify for tax relief, such as Business Asset Disposal Relief (formerly Entrepreneur’s Relief) or Principal Private Residence Relief. A tax accountant can identify these opportunities to reduce your tax burden.

Advising on Gifted and Transferred Assets

If an asset is gifted before death, different tax rules apply. CGT accountants can provide guidance on how to transfer assets efficiently to minimize future tax liabilities. While capital gains tax accountants are highly knowledgeable about tax matters, inheritance tax can be more complex and may require specialized expertise. Consider hiring an inheritance tax specialist if:

• You need comprehensive estate planning.

• Your estate is above the inheritance tax threshold.

• You are dealing with international tax issues.

• You want to set up trusts to minimize future tax liabilities.

Common Inheritance Tax and Capital Gains Tax Scenarios

Scenario 1: Selling an Inherited Property

If you inherit a house and decide to sell it, CGT is only due on the increase in value from the date of inheritance to the sale date. A CGT accountant can help calculate and minimize this tax.

Scenario 2: Gifting Property to Family Members

If you gift a property while alive, CGT may apply unless exemptions are available. Inheritance tax may also come into play if the donor passes away within seven years.

Scenario 3: Inheriting Stocks and Shares

When inheriting stocks, there is no immediate CGT. However, if you sell the shares later, CGT is calculated on the increase in value from the date of inheritance.

How to Choose the Right Tax Professional

Ensure the accountant has experience in both capital gains and inheritance tax matters. A knowledgeable accountant should offer legal strategies to minimize tax burdens. Look for credentials such as Chartered Tax Adviser (CTA) or Certified Public Accountant (CPA). Tax advisory fees vary, so get quotes and understand what’s included in the service.

How an Online Tax Advisor Can Assist with Tax Relief

Online tax advisors use digital platforms to provide tax-related services, offering an alternative to traditional face-to-face accountants. They can help you claim tax relief in the following ways: Many taxpayers are unaware of the tax reliefs they can claim. An online tax advisor can assess your financial situation and identify opportunities to reduce your tax bill. By using digital tools and questionnaires, they can determine whether you qualify for expenses, deductions, or allowances.

Simplifying the Tax Relief Application Process

Claiming tax relief often involves completing forms and providing documentation. Online tax advisors can guide you through the process step by step, ensuring that you submit accurate and complete applications to HMRC. UK tax laws are complex and frequently change. Online tax advisors stay updated on the latest tax regulations and ensure that your claims comply with HMRC guidelines. This reduces the risk of errors, penalties, or audits.

Using Technology to Streamline Tax Claims

Many online tax advisory platforms use AI-driven software and automated tools to process claims efficiently. These platforms can connect to your bank transactions, invoices, and payslips to calculate eligible tax reliefs accurately. Compared to hiring a traditional accountant, online tax advisors often offer more affordable services. Many platforms charge a flat fee or a commission based on the tax refund they help you secure.

Offering Remote and Convenient Access

One of the biggest advantages of online tax advisors is accessibility. You can consult a tax expert from anywhere in London, eliminating the need for in-person meetings. This is particularly beneficial for busy professionals and business owners.

Limitations of Using an Online Tax Advisor for Tax Relief

While online tax advisors offer many benefits, there are some limitations to consider: Online tax services often rely on automated systems, chatbots, or standardised advice. If your tax situation is complex, you may need a more personalised approach that only a traditional accountant can provide.

Limited Assistance with HMRC Investigations

If HMRC raises queries or audits your tax relief claims, an online tax advisor may not provide full representation. In such cases, a local tax accountant in London may be better equipped to handle disputes and negotiations with HMRC.

Potential Data Security Concerns

Submitting sensitive financial information online carries certain risks. While most reputable online tax advisors use encryption and secure servers, there is always a small risk of data breaches. If you have multiple income sources, international tax obligations, or significant business expenses, an online tax advisor may not offer the level of expertise required. For complex tax planning, working with a dedicated accountant may be more beneficial.

How to Choose the Right Online Tax Advisor

If you decide to use an online tax advisor to claim tax relief in London, consider the following factors: Look for online tax advisory services with positive customer reviews and testimonials. Check independent review sites and forums for feedback from other users.

HMRC Accreditation

Ensure the advisor or platform is recognised by HMRC and follows regulatory guidelines. Some online tax advisors are registered tax agents with HMRC, which adds credibility. Avoid services with hidden fees or unclear pricing structures. Some online tax advisors charge a percentage of the refund, while others offer a fixed-rate service.

Data Security Measures

Check the security policies of the platform to ensure your financial data is protected. Secure login methods, encryption, and compliance with GDPR regulations are essential. Some online tax platforms provide access to human tax advisors in addition to automated tools. If possible, choose a service that offers real-time chat or phone consultations with a tax expert.

Conclusion

While capital gains tax accountants can help with certain inheritance tax issues, they are not always the best option for complex estate planning. If you need guidance on selling inherited assets or minimizing capital gains tax, they can be incredibly helpful. However, for extensive inheritance tax planning, an inheritance tax specialist may be a better choice. Understanding your needs will help you select the right professional to ensure your tax affairs are in order.

FAQs

1. Do I have to pay capital gains tax on an inherited house?

No, CGT is not due when you inherit a house. However, if you sell it later, CGT applies to any increase in value from the date of inheritance to the sale date.

2. Can I avoid inheritance tax with estate planning?

Yes, strategic estate planning, including trusts and gifts, can help reduce inheritance tax liability.

3. Do I need a capital gains tax accountant or an inheritance tax specialist?

If you’re selling an inherited asset, a CGT accountant is useful. If you need estate planning or inheritance tax strategies, consult an inheritance tax specialist.

4. How is capital gains tax calculated on inherited assets?

CGT is based on the difference between the asset’s value at inheritance and its sale price, minus any allowable deductions.

5. Are there exemptions for inherited business assets?

Yes, some business assets qualify for relief, reducing or eliminating CGT when sold.