Capital Gains Tax – personal representatives beneficiaries and allowable expenses

Under s62 (1) TCGA 1992, all the assets owned by the deceased are treated as having been acquired by the personal representatives for the value at the date of death. It is, however, made clear in the legislation that there is no Capital Gains Tax (CGT) disposal by the deceased, so no chargeable gain or allowable loss can be treated as accruing to the deceased. The most that the personal representatives may be able to do, if they act quickly, is to make a claim that an asset became of negligible value during the deceased’s lifetime and should be deemed to have been disposed of, by the deceased, during his lifetime. This should result in an allowable loss able to serve to reduce the CGT liability of the deceased (see Dawn and Leadley (Executors of Leadley HMRC (2014) UK FTT 892, noted in the October 2014 issue of Trusts & Estates). Where an asset is assented to a beneficiary to whom it has been left, then the beneficiary steps into the shoes of the deceased, being deemed to acquire the assets for the market value at the date of death (s62 (4) TCGA 1992). Of course, when the personal representatives sell an asset in the course of the administration, or a beneficiary sells an asset he has inherited, he will be able to claim the costs incurred in connection with the sale as allowable expenses within the CGT computation. But what cost, if any, can be claimed in connection with the acquisition?