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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Period of administration and ascertainment of residue: Personal representatives: acquire at market value

TCGA92/S62 (1)

All the assets of the deceased which pass to his or her personal representatives are deemed to have been acquired by them at market value at the date of death, TCGA92/S62 (1)(b). The market value at the date of death should be used as the acquisition cost in any computation for sales of assets made by the personal representatives. See CG32210+ regarding establishing this market value.

This principle also applies to trading stock of a sole trader who dies. In such cases ITTOIA05/S173(4) , see BIM33520, disapplies the provisions in ITTOIA05/S173(1) that would normally require the market value of trading stock to be brought into the accounts as the closing value for Income Tax purposes, see BIM33470. The final accounts in such cases will therefore normally use cost as the closing valuation. Despite this the acquisition cost of that stock to the personal representatives is to be taken as the market value:

  • If the personal representatives do not continue the trade but merely dispose of the trading stock this can give rise to chargeable gains if the trading stock consists of chargeable assets. This is particularly likely to happen when the trading stock includes land.
  • If the personal representatives continue the trade the opening stock figure in the accounts of their trading will be the market value of that stock at the date of death.

Similar principles will also apply to the work in progress of a profession or vocation carried on by a single individual who dies.