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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Non-retrospective variations: disposals not for valuable consideration

A non-retrospective variation may be made purely voluntarily with no valuable consideration received. For example if

  • a deed of variation or disclaimer is voluntarily executed outside the period of 2 years from the date of death


  • if a deed of variation is voluntarily executed within the 2 year period but no valid election under TCGA92/S62(7) is made


  • the beneficiary gifts his or her interest in the estate to some other person

then there will be no valuable consideration.

An agreement to assign a future chose in action, see CG31950, is only a good assignment when it is made for valuable consideration. When there is no valuable consideration the assignment can only take effect once there are specific assets that the legatee can assign. This position is only reached when assets vest from the estate to the legatee, normally when the residue is ascertained.

The result is that in such a case TCGA92/S28 does not operate to fix the date of disposal at the date of variation. Instead the disposal only occurs when assets actually vest in the legatee and are then transmitted on to the assignee. At that time the legatee is deemed to both acquire and immediately dispose of the assets to the assignee. The legatee’s acquisition cost at this time will be the market value at the date of death by reason of TCGA92/S62 (4). The disposal, not being a bargain at arm’s length, will take place at the market value of the chargeable assets passing to the assignee at that time. As for any other disposal made otherwise than by way of a bargain at arm’s length, if the disposal occurred before 14 March 1989 an election for gifts holdover relief under FA80/S79 can be made, see CG66450+.