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November 23, 2022

Capital Gains Tax Implications of Administration Periods for Estates

What is the Administration Period?

The administration of an estate involves the personal representatives "PRs" identifying and valuing the assets contained in the estate, settling liabilities, paying legacies and distributing the residue (if any).  The administration period starts on the day following the date of death of the deceased person.

What is the relevance of the Administration Period for Capital Gains Tax "CGT"? 

During the administration period of an estate, the PRs are liable to CGT on any chargeable gains made (i.e. the estate itself could be liable to CGT and an estate tax return may be required). The estate may have an annual exempt amount available, but this is only for a limited period following the date of death.

However, following the end of the administration period, any gains made may instead be taxable on the beneficiaries under the Will based on their entitlements under the Will (i.e. individual self-assessment tax returns and/or CGT returns may be required and individual annual exempt amounts may be available).

Specific actions can also be taken to transfer the ownership assets to beneficiaries under a Will prior to the end of the Administration Period, so that individual annual exempt amounts are available.

When is the end of the Administration Period? 

The administration period of an estate ends when the residue of the estate has been ascertained.

Determining when the residue of the estate has been ascertained is a complicated process and requires a detailed analysis of the assets and liabilities of the estate.

Therefore, this will need careful consideration.

Contact Us 

We can carry out an analysis of the deceased's estate to work out whether the administration period has ended and who the sales of assets should be taxable on. As noted above, this can be significant when calculating any CGT liabilities and the availability of annual exempt amounts.

If you require assistance regarding this, please contact a member of our team.

Disclaimer: This article is for general information only and is not intended to constitute individual advice. It is recommended that you seek independent tax advice during the administration period of the estate to understand your tax position. 

Related Articles 

Tax Liabilities of Deceased Estates


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