Here’s what you need to do if you inherit some shares in a will:
Get the inherited shares in your name
First of all, you will need to inform the respective share registrars that the former shareholder is now deceased.
When Grant of Probate is received, send a sealed copy of this to the respective registrars and ask for their records to be updated.
After confirmation of this has been received from the registrars, the shares can either be passed to a broker for them to be sold, or if the shares are to be re-registered, you will need to contact the registrars to obtain the necessary forms to achieve this.
What is probate?
Be tax efficient
The most efficient way to hold shares is in an ISA, as it means less money is handed over to the taxman.
Savers are not allowed, under current ISA rules, to simply transfer existing holdings directly into the tax wrapper. The shares need to be sold and bought back again, via an ISA. The process has a rather quirky name, known as “bed and ISA”.
For more information on ISAs as an alternative saving option, please click here.
It is a widely used process but there are some charges to prepare for. In undertaking the “bed and ISA” strategy, the sale of the shares should trigger a capital gain, which is taxable.
There are some dealing costs to consider too. The exact charges will depend on the advisory firm or stockbrokers used. Some will vary their fees depending on the value, or frequency of these share deals.
It’s important to choose the broker whose charges best reflect the amount you are looking to sell, whether percentage or fixed cost.
Remember that unless the shares are valued at under £1000, selling your inherited shares would also incur stamp duty at 0.5%.
The other ‘cost’ to bear in mind is any loss incurred if you sell your shares lower than the price at which you buy.
Can you inherit an ISA from your spouse?
Want to sell inherited shares?
Louis Coke at Charles Stanley says: “If you are looking for a broker to sell the shares for you, they will typically need the share certificates, transfer forms and identification from you as the beneficiary, or, if you are selling the shares from the estate, they will need the Grant of Probate, and authority from the executors to sell the shares.”
Each brokerage firm may have slightly different requirements, so it is best to check with them first, to see if anything extra is required.
To work out your taxable gain, just take your net sale proceeds (after commission) and deduct the value of the shares at the date you inherited them.
This will give you your capital gain chargeable to tax. If this figure is less than £11,100 then you will have no tax to pay – as long as you haven’t made any other capital gains that year.
Since this is an annual allowance, you could sell some on April 5th and the rest after April 6th and get two years' worth of allowances.
You need to find out what price you acquired the shares at. You would have been given that as part of the inheritance.
Are you aged 50 or over and considering share dealing to help fund your retirement? Saga Share Direct, provided by Equiniti Financial Services Limited, allows you to buy and sell a range of UK shares and funds with competitive pricing and no annual account management fees. Some investment types may have their own fees.
Shares are high‐risk investments. Share prices and the income from them can fall as well as rise and you may not get back the full amount invested. Saga Share Direct does not offer advice. If you are unsure whether this service is suitable for you, please consult a financial adviser.
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