Capital Gains Tax

Probate and CGT liability

This tax applies when the Personal Representative decides to sell capital assets from the estate. It also applies when someone inherits assets from the deceased’s estate and then decides to sell or dispose of the property. In this case the person will have to deduce the capital gain or loss.

Chargeable gain is when an asset is sold, disposed, given away or exchanged and its value has increased since it was acquired.  The Capital Gains tax is the charge on the increase of its value in the time period it was owned, not the asset itself.

When the Personal Representative takes control of the assets of the deceased, it is considered that they gained control of them at the market value at the date of the deceased’s death. However when an asset is inherited to a beneficiary through a will or intestacy, it does not fall under Capital Gains tax.

If the Personal Representative needs to sell assets from the estate to settle debts, pay Inheritance tax or give cash to beneficiaries, they will have to declare any chargeable gains you realise on estate assets. This will be paid out of estate funds. Capital Gains tax is applicable on capital gains on estate assets during the administration, and is charged at a rate of 18%.

When you take control of the deceased's assets, they are treated as if you had acquired them at their market value at the date of death.

When you transfer an asset to a beneficiary under the will or under the rules of intestacy, you are not treated as disposing of it for Capital Gains Tax purposes. You have no chargeable gain or allowable loss on that disposal. Instead, the beneficiary is treated as if they had acquired the asset on the date of death, at its market value on that date.

Sometimes you may need to sell assets during your period as Personal Representative, for example, to raise money to pay Inheritance Tax or to settle cash legacies. If so, you will have to declare any chargeable gains you realise on estate assets, and pay Capital Gains Tax out of estate funds. Capital Gains Tax is chargeable on the personal representative only on gains arising on estate assets during the period of administration. The rate of Capital Gains Tax on personal representatives is 18 per cent for 2008-09.

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