Capital Gains Tax on Inherited Assets: Probate Value and Reporting

The rebasing principle

When someone dies, their assets are rebased to market value at the date of death for CGT purposes. This is known as the "uplift on death". It means:

• Any gain made by the deceased during their lifetime is wiped out for CGT — there is no CGT charged on death
• The new base cost for CGT (for the estate and beneficiaries) is the probate value
• Any gain above the probate value — if the asset is sold for more — is chargeable to CGT

This is separate from inheritance tax, which is charged on the full value of the estate at death. There is no double taxation — CGT and IHT apply at different stages. See our inheritance tax guide for the IHT side.

What is the probate value?

The probate value is the open market value of the asset at the date of death. For property, this is typically assessed by a RICS-qualified surveyor or estate agent. For shares and investments, it is the market price on the date of death (or the quarter-up rule for certain assets).

The probate values are declared on the inheritance tax account (IHT400) and form the basis of the grant of probate. HMRC Inheritance Tax can challenge probate values if they appear undervalued — it is important to use professional valuations for significant assets.

CGT during the administration period

During the administration period, the executor may sell estate assets. If an asset is sold at above its probate value, the estate is liable to CGT on the gain. The rates during administration are:

• Residential property: 24% (as of 2024–25 onwards)
• Other assets (shares, investments, etc.): 18% (basic rate) or 24% (higher rate) depending on the total taxable income of the estate

The estate is entitled to an Annual Exempt Amount for the tax year of death and the following two tax years. After those three years, no Annual Exempt Amount is available.

For a straightforward property sale, see our selling a probate property guide.

Main residence relief on probate property sales

If the property was the deceased's only or main residence, the executor can claim Private Residence Relief (also called main residence relief) for:

• The full period the deceased lived in the property as their main home
• An additional 36 months after the date of death — regardless of whether anyone is living in the property

In practice, if the property is sold within 36 months of death and it was the deceased's main home throughout, the executor will usually have no CGT liability. This is because the relief covers the entire period of ownership (deceased's residence + 36 months post-death).

If the property was not the deceased's main home (e.g., a rental property or holiday cottage), main residence relief does not apply, and the executor will pay CGT on any gain above probate value.

The 60-day reporting rule for property

Since April 2020, CGT on UK residential property sales must be reported and paid within 60 days of completion. This applies to estate property sales unless the full gain is covered by main residence relief.

The executor uses HMRC's "Report and pay CGT on UK property" online service. A Government Gateway account is needed. The steps are:

1. Calculate the gain (sale price minus probate value, minus selling costs and any improvement costs)
2. Apply any available reliefs (main residence relief, Annual Exempt Amount)
3. Report the net gain online within 60 days of completion
4. Pay the tax due at the same time

Late reporting incurs a £100 automatic penalty, with further daily penalties for returns more than 3 months late.

Shares and investment portfolios

When investment portfolios are liquidated during administration, any gain above probate value is potentially chargeable to CGT. The probate value for shares is the market price on the date of death (the "quarter-up" rule may apply to certain assets).

The estate can offset losses from one asset against gains on another. If there are net losses, they can be carried forward within the estate (but not transferred to beneficiaries).

For the process of collecting investment assets, see our collecting assets after probate guide.

When beneficiaries inherit assets (not cash)

If a beneficiary inherits an asset in specie (e.g., a share portfolio or investment property transferred directly rather than sold), they take over the asset at the probate value as their base cost. This is sometimes called a "no gain, no loss" transfer — no CGT is triggered on the transfer itself.

When the beneficiary later sells the asset, they pay CGT on any gain above the probate value. The beneficiary can use their own Annual Exempt Amount and CGT rates. For assets transferred using an assent or deed of appropriation, see our assenting property to a beneficiary guide and deed of appropriation guide.

Using losses in the estate

If estate assets are sold for less than probate value, the estate realises a loss for CGT purposes. This loss can be:

• Offset against other gains in the same tax year
• Carried forward to future tax years within the administration period

For property sold within 4 years of death at below probate value, the executors can make a claim to reduce the IHT valuation to the sale price — effectively reducing the IHT already paid. This is a separate "loss on sale of land" claim to HMRC Inheritance Tax.

CGT and the SA900 income tax return

Property CGT is reported separately via the 60-day CGT service — not on the SA900. However, CGT on non-property assets (shares, investments) can be reported either via HMRC's online CGT service or on supplementary page SA905 of the SA900. For the income tax return process, see our completing the SA900 guide.

For the full estate administration sequence, see our what to do after grant of probate guide, estate administration checklist, and complete UK probate guide 2026. For applying for probate, see our applying for probate guide. Farra can help — get started here.