Capital gains tax issues on death
Capital gains tax issues on death

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Capital gains tax issues on death
  • Death is not a disposal but is a deemed acquisition
  • Market value at death and 'ascertained' value
  • Variations and s 62(6) relief
  • The identity of the settlor
  • Section 62(6) relief must be claimed—but is it always beneficial?

This Practice Note was originally produced in partnership with Tolley Guidance and is now maintained by Lexis®PSL.

Death is not a disposal but is a deemed acquisition

The rules dealing with capital gains tax (CGT) on death provide that:

  1. assets the deceased was competent to dispose of are deemed acquired by the personal representatives (PRs), or any other person on whom they devolve, at their market value at the date of death but are deemed not to have been disposed of by the deceased

    1. this means death is not a disposal but nonetheless the assets acquire a new base value for CGT purposes. Any unrealised pre-death gains are effectively wiped out and assets that have risen in value since their original acquisition by the deceased are given a tax-free uplift for the calculation of future gains

    2. this applies also to the deceased's interest in joint property

  2. if PRs sell an asset in the administration period, they are liable for any CGT on any gains realised after deduction of any losses they incur on their disposal. In addition to normal deductions for incidental selling expenses, PRs can deduct a proportion of the cost of valuing the estate for probate purposes. HMRC has published a list of permitted deductions, though more can be claimed subject to proof that the actual cost was