19 October 2023 Issue 5 ​​​​​​​Katie Buckley TEP

A capital idea

Appropriating assets from an estate can save capital gains tax in the UK, writes Katie Buckley

Capital gains tax (CGT) in the UK is charged when an asset is sold or transferred at a profit. The gain is calculated by taking the sale proceeds and deducting the purchase price, together with any enhancement expenditure. Incidental costs of purchase and acquisition can also be taken into account in calculating the gain.

CGT can arise on the disposal of personal possessions, shares or securities, the sale of a second property, or assets held in trust and assets sold from a deceased estate during the period of administration.

Since 6 April 2023, the annual CGT exemption has reduced from GBP12,300 to GBP6,000 for individuals and personal representatives (PRs). Similarly, the CGT exemption for trustees has reduced from GBP6,150 to GBP3,000.

From 6 April 2024, the annual CGT exemption will reduce further to GBP3,000 for individuals and PRs and GBP1,500 for trustees.

With the significant reduction in the annual CGT exemption, appropriating assets to beneficiaries prior to sale to make use of multiple annual allowances is now a key tax saving consideration when administering an estate.

Please login to access this content

If you are not a member, find out more about joining STEP or subscribing to STEP articles.