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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Variations: estate: deeds of appointment: power to appoint

Where the trustees exercise their powers of appointment before the assets have vested in them then the assets are still in the hands of the personal representatives at the time of the exercise. Even though these may be the same individuals as the trustees they are different bodies of persons for CGT purposes, see CG31110 - CG31120. If, in these circumstances, the trustees make an appointment under the specific powers given to them in the will, then when the asset(s) vest they should be treated as passing direct to the appointee.

The asset(s) appointed should be treated as never becoming subject to the trust. In effect, the appointment is read back into the will. It is treated as though the deceased had intended the assets concerned to pass directly to the legatee rather than into trust. The appointee then takes those asset(s) as legatee and therefore acquires the asset(s) at probate value by reason of TCGA92/S62 (4), see CG31140+. The time limits and procedures in TCGA92/S62(6) and (7) do not apply to this treatment.