CGT planning for farms

Julie Butler and Libby James examine the executors’ responsibility to capital gains tax planning on farms

CGT is often forgotten when dealing with the affairs of a deceased though its impact can be considerable when, for example, assets are sold for more than probate value. By considering all circumstances of the estate and beneficiaries in the round, significant savings can be made on the estate’s tax bill.

The importance of values when considering appointment

The probate value is the value of an asset agreed with HMRC at the date of death. This becomes the acquisition value or base cost for the estate, essentially resulting in a tax-free ‘uplift’ for Capital Gains Tax (CGT) purposes. A capital gain would then arise where the asset increases in value during the course of the administration of the estate.