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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Legatees and their treatment: Computing gains arising to legatees: Legatees: gains arising: no indexation allowance: certain xfer expenses

Although the expenditure incurred by the legatee personally may qualify for indexation allowance, being expenditure within TCGA92/S38 (2), the expenditure incurred by the personal representatives will not. This is because Section 64(1) merely provides for a deduction of this expenditure in the computation. It does not deem it to have been expenditure incurred by the legatee and thus within Section 38(2). As a result it is not relevant allowable expenditure for the purposes of TCGA92/S54 (2) (b).

NOTE. If a taxpayer is within the charge to Capital Gains Tax, neither indexation allowance nor taper relief apply to disposals of assets on or after 6 April 2008. Previously indexation allowance had been frozen at April 1998. Companies and other concerns within the charge to Corporation Tax are not affected by these changes. For indexation allowance see CG17207+ and for taper relief see CG17895.