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Readers’ forum: Inheritance income

25 August 2020
Issue: 4758 / Categories: Forum & Feedback
Taxation on income derived from inheritance.

My client’s mother died in June 2019 leaving a portfolio of open-ended investment companies (OEICs) among other assets to him and his two sisters. A decision was taken to assign the shares to the beneficiaries in satisfaction of his entitlement so that they would be assessable on gains made on sale and would benefit from three annual exemptions. However the disposal was delayed until recently because of the coronavirus pandemic.

I am happy that a third of the gains over probate value will go on each beneficiary’s 2020-21 tax return but I am wondering what to do with any income. Should a third of accumulations and distributions reported by the funds from June 2019 to April 2020 be shown as income on each beneficiary’s 2019-20 tax return? Further entries would then be made on the 2020-21 returns from 6 April to the date of sale?...

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