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Yes, an estate can be liable for Capital Gains Tax (CGT) when the executor sells assets that have increased in value since the date of death. However, assets receive a CGT "uplift" to their market value on death — meaning any gain accumulated during the deceased's lifetime is wiped out. CGT is only charged on growth between the date of death (the probate value) and the date of sale. Personal representatives have the same £3,000 annual exempt amount as an individual, for the tax year of death and the two tax years after it.
Executors who need to sell assets — shares, property, jewellery, antiques, or other investments — to fund the estate or distribute to beneficiaries may inadvertently trigger a CGT liability if they do not understand how the rules apply. The good news is that the CGT uplift on death eliminates all gains accumulated during the deceased's lifetime. The bad news is that estates often hold assets for months or years before sale, during which time values can rise again. This guide covers the essential CGT rules for personal representatives.
Under section 62 of the Taxation of Chargeable Gains Act 1992, assets passing from a deceased person to their personal representatives (executors or administrators) are deemed to be acquired at their market value on the date of death. This is the CGT "uplift" or "free step-up."
The practical effect is that any gain accumulated on an asset during the deceased's lifetime is extinguished for CGT purposes. For example:
The probate value used for CGT purposes should be the same figure as the value declared on the IHT return — the IHT400, or the figures reported for an excepted estate. HMRC can and does compare these figures, so consistency between the IHT and CGT positions is important.
The annual exempt amount is £3,000. Section 1K(7) of the Taxation of Chargeable Gains Act 1992 gives personal representatives the same figure as an individual, but only "for the tax year in which an individual dies and for the next two tax years". So:
£1,500 is the trustees' figure, not the executors':
You will often see £1,500 quoted as "the estate's" annual exemption. That is the half-allowance for trustees, set out in HMRC's helpsheet HS294 on trusts and Capital Gains Tax. Personal representatives are not trustees for this purpose, and get the full £3,000 for the three tax years described above.
Any gains below the annual exempt amount are free of CGT. Over the year of death and the next two tax years, that is up to £9,000 of gains sheltered — but nothing after that.
Like individuals, the estate cannot carry forward an unused annual exempt amount from one tax year to the next. If the estate has gains below £3,000 in a given year, the unused portion is lost.
CGT gains made by an estate during administration are reported to HMRC through the SA900 Trust and Estate Tax Return. This is a separate return from the individual's final self-assessment return for the year of death.
The SA900 must be filed if:
The SA900 deadline is 31 January following the tax year in question for online filing (or 31 October for paper filing). The return covers the period from 6 April to 5 April, so gains made across two different tax years are reported in the respective returns.
Residential property: the 60-day reporting rule
Where the estate sells a UK residential property that was not the deceased's main residence (or has not been used as the main residence of a beneficiary), the CGT must be reported and paid within 60 days of the completion date using HMRC's UK Property Reporting Service (a separate online portal from self-assessment).
The 60-day obligation bites where there is tax to pay. GOV.UK is explicit that "you do not need to report your gains online if your total gains are less than the tax-free allowance", so a disposal that produces no chargeable gain after the annual exempt amount, losses and any relief does not need a 60-day return. Where tax is due, the executor must register for a Capital Gains Tax on UK Property Account on the HMRC website, report the disposal, and pay within 60 days of completion. The gain is then also included on the SA900 for the relevant tax year, with the 60-day payment credited against the final figure.
The 60-day rule does not apply to the deceased's main residence:
If the property was the deceased's main residence throughout their ownership, Private Residence Relief eliminates any CGT charge — and the 60-day reporting obligation does not apply. However, this only applies where the property genuinely qualifies for full relief. Where the property was let out or used for business purposes at any point, a proportionate charge may still apply, and reporting may be required.
Personal representatives pay CGT at the following rates:
There is no longer a split rate for personal representatives. GOV.UK gives a single rate of 24% for trustees and for personal representatives of someone who has died. The old 28% residential rate went on 30 October 2024, and the 20% rate on other assets no longer applies here either.
Personal representatives also have no basic-rate band of their own, so they cannot access the 18% rate an individual pays on gains falling within their basic rate Income Tax band. The estate pays 24% regardless of the size of the gain.
That is one reason executors sometimes transfer assets to beneficiaries before sale rather than selling through the estate. A beneficiary has their own £3,000 annual exempt amount, and a beneficiary whose gains fall within their basic rate band pays 18% rather than 24%. It requires the asset to be formally appropriated to the beneficiary first, and it moves the tax — and the reporting — onto the beneficiary rather than removing it.
Not all estate assets increase in value after death. If an asset is sold for less than its probate value, the estate has made a capital loss. Capital losses within an estate can be:
The land relief has a de minimis: it does not apply where the sale value differs from the death value by less than the lower of £1,000 and 5% of the death value. It also does not apply to a sale by the personal representatives to a beneficiary or their close family.
The IHT loss relief claim is particularly valuable where a portfolio of shares has fallen since death. It effectively refunds IHT paid on a value that was never realised. The claim must be made no more than four years after the end of the relevant sale period — so five years from the death for shares, and seven for land, not four years from the death.
Executors have some limited scope to manage CGT liabilities during the administration period:
The interaction between CGT, IHT and income tax on an estate is genuinely intricate, and the reliefs described above pull in different directions — a s191 claim that lowers the IHT bill also lowers the CGT base cost. Where the sums are large enough for that to matter, it is a question for someone who can look at the whole estate.
CGT is separate from Inheritance Tax:
It is important to understand that CGT and IHT are entirely separate taxes. IHT is calculated on the value of the estate at death. CGT arises during administration if assets increase in value after death. It is possible to have both IHT and CGT liabilities on the same estate — for example, a large estate that pays IHT on probate values, and then pays CGT when property is subsequently sold for more than the probate value. An executor should plan for both taxes simultaneously rather than treating them in isolation.
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