Capital gains tax issues on death

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

  • Capital gains tax issues on death
  • CGT position on an individual’s death
  • CGT on disposals during administration period
  • Market value at death and ‘ascertained’ value
  • Variations and s 62(6) relief
  • The identity of the settlor
  • Variation after assets vested in original beneficiary
  • Section 62(6) relief must be claimed—but is it always beneficial?

Capital gains tax issues on death

STOP PRESS: The Office of Tax Simplification published its first report on the review of capital gains tax (CGT) on 11 November 2020. The report considers the potential removal of the CGT uplift on death. The outcome of the consultation is not yet complete and it is not known which, if any, of the proposals will be put forward in draft legislation in the future. See: OTS Capital Gains Tax Review: Simplifying by design.

CGT position on an individual’s death

The rules dealing with CGT on death provide that:

  1. assets that the deceased was competent to dispose of are deemed to be 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, meaning that:

    1. death is not a disposal for CGT purposes and no CGT arises as a result of the individual’s death, but

    2. the assets acquire a new base value for CGT purposes, ie 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 in the hands of the PRs or beneficiaries of the deceased’s estate. This applies also to the deceased's

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