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HMRC internal manual

Capital Allowances Manual

PMA: Partnerships and successions: Successions by beneficiaries


A person who is a beneficiary under a will or intestacy may succeed to a qualifying activity previously carried on by the deceased person.

The beneficiary may make an election by notice to HMRC.

If they do that any assets previously owned by the deceased:

  • that pass to the beneficiary with the qualifying activity, and
  • that are used or provided for use in the qualifying activity by the beneficiary,


are treated as sold to the beneficiary when the succession takes place.

The sale price is the lower of:

  • market value, and
  • the unrelieved qualifying expenditure at the time of death.


The unrelieved qualifying expenditure at the time of death is the amount of expenditure left in the pool at the time of death after deducting any disposal values for the chargeable period in which the death occurs. The disposal value of any assets transferred to the beneficiary is treated as nil.

Where an election is made under Section 268 it applies to any previous succession occurring on or after the death.

If the beneficiary sells an asset that was inherited with the business the disposal value taken into account is restricted to the deceased person’s qualifying expenditure rather than the value at which the beneficiary took over the asset.

Example Jim runs a coffee shop. When he dies Ray inherits the business and makes an election under Section 268. One of the assets that Ray takes over is a car that had cost Jim £30,000. The value at which Ray takes it over is £20,000. If Ray sells the car for £25,000, that is the disposal value. It is not restricted to £20,000, the value at which Ray took over the car.