Tax treatment of capital received by beneficiaries under a Will
Tax treatment of capital received by beneficiaries under a Will

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

  • Tax treatment of capital received by beneficiaries under a Will
  • CGT on transfers by PRs to estate beneficiaries and trustees (legatees)
  • CGT on later disposals by legatees
  • Charity as a beneficiary
  • CGT and alterations to dispositions after death
  • Practical CGT issues involving PRs and beneficiaries

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

On an individual's death, the personal representatives (PRs) will generally wish to calculate and settle the inheritance tax (IHT) liability in order to obtain the grant of probate and administer the estate. The PRs are also responsible for finalising the deceased's tax affairs to the date of death and often the income tax and/or capital gains tax (CGT) owed by the deceased will impact on the precise IHT liability.

The PRs will then need to account separately to HMRC for any CGT (and income) arising during the administration period. Broadly speaking, this is the period from the date of death until the estate is wound up. CGT may arise when the PRs sell estate assets which have risen in value since the date of death, albeit if the sale is within a certain period of death the sale value may be substituted for IHT purposes instead of the PRs incurring a CGT liability.

This Practice Note considers the CGT position where estate assets are transferred by the PRs to beneficiaries (rather than sold to third parties). For further information on the general CGT position during the administration of an estate, see Practice Notes: Income tax and capital gains tax during administration and Capital gains tax issues on