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The general rule is that if the value of an asset on death is agreed for
inheritance tax purposes that value must also apply for capital gains tax
purposes. This rule works well as ordinarily the inheritance tax event
precedes the capital gains event, namely the subsequent disposal of that
asset.
This year’s Finance Bill will introduce the legislation announced in the
Pre-Budget Report to allow the unused amount of the nil rate band to pass to
the surviving spouse.
By the time of the death of the surviving spouse, the value of an asset
inherited by the surviving spouse may already have been determined for
capital gains tax purposes. This might be, for example, because that spouse
has sold the asset.
The new legislation will ensure that a previously determined valuation for
capital gains tax purposes is not displaced by a different one established
for inheritance tax purposes. Otherwise the capital gain tax calculation
would need to be re-opened.
Our view
This is a sensible change to prevent administrative confusion. |
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