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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Period of administration and ascertainment of residue: Personal representatives: transfers to legatees: no chargeable gain

TCGA92/S62 (4)

When beneficial ownership of any asset of the estate passes from the personal representatives to a legatee, see CG30900+, normally on the ascertainment of residue, see CG30780+, TCGA92/S62 (4)(a) provides that no chargeable gain shall accrue to the personal representatives.

This exemption from charge applies only when the person acquiring the asset is a legatee as defined in TCGA92/S64 (2), see CG31100+.

If an estate has insufficient liquid assets to pay its liabilities and a legatee wishes to receive a particular asset rather than it being sold on the open market by the personal representatives the legatee may agree with the personal representatives that he will provide them with sufficient funds to settle the estate’s liabilities in return for them transferring the asset to him. Such an arrangement was considered in the case of Passant v Jackson (59TC230). The Appeal Court held that the arrangement was a sale of the property. So in any case involving a similar arrangement it should not be accepted that there was merely a transfer of an asset to a legatee under cover of TCGA92/S62 (4).