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HMRC internal manual

Capital Gains Manual

Death and Personal Representatives: Non-retrospective variations: assets still vested in PRs: assignees

If the non-retrospective variation is made for valuable consideration then the assignee acquires a chose in action at the date of the assignment, being a right to the future expectation of assets vesting from the estate.

On a purchase for cash the cost of this chose in action is the sum paid. However if the valuable consideration is the giving up of rights to pursue court action the cost must be equal to the market value of the consideration received by the legatee. The basis used to arrive at that figure is set out in CG31980. The same principles should be applied in arriving at the assignee’s figure of cost for this chose in action.

When the assets vest from the estate, the assignee makes a disposal of the chose in action acquired at the date of the variation. The disposal consideration is the value of the assets delivered to him by the legatee. A Capital Gains Tax computation must therefore be carried out at this time using the total value of all the assets, both chargeable and non-chargeable, vesting from the estate as the assignee’s disposal consideration. This may give rise to a chargeable gain or allowable loss to the assignee.

When the assets vest from the estate, the assignee makes a disposal of the chose in action acquired at the date of the variation. The disposal consideration is the value of the assets delivered to him by the legatee. A Capital Gains Tax computation must therefore be carried out at this time using the total value of all the assets, both chargeable and non-chargeable, vesting from the estate as the assignee’s disposal consideration. This may give rise to a chargeable gain or allowable loss to the assignee.