A client's father has recently died who held a group of shares with his bank (cost £32k). The client has done some research on the subject and the bank and HMRC have told her that the disposal is not a capital gain due to the fathers death (or something similar) and is in fact a chargeable event.
Now I've only brushed this briefly in my CTA studies as it's not a popular subject nor is it a very common tax area in practice, but now it's come up, I need some assistance to fully understand the implications of this.
The client has always been a basic rate taxpayer and has only had pension income which has put him no where near the higher rate bracket. I read that if they were a basic rate taxpayer, then the tax on the qualifying gain from the share disposal is already paid for and therefore there is no tax liability nor does the client even have to do anything regarding Self Assessment.
The shares were disposed for around £43 so the gain on the policy was only £11k. Shame it's not a capital disposal as the resulting CGT would have been a poxy £209 after the annual exemption, I'm just hoping there's no massive liability as a result of the gain.
Please can someone clarify why it's a chargeable event and also whether my assumptions are correct on there been no tax to pay or any SA requirement?