If personal representatives sell an asset during the administration, the gain is theirs: it is taxed at 24% and the whole estate shares one annual exempt amount, available only for the tax year of death and the next two. If they first appropriate the asset to a beneficiary, no gain arises to the estate under section 62(4) TCGA 1992 and the beneficiary takes over the probate value, so a later sale is taxed on the beneficiary at their own rates with their own allowance. Which route costs less depends on the size of the gain, how many beneficiaries there are, their income and whether the estate needs Inheritance Tax relief for a fall in value.

What is the difference between selling in the estate and appropriating first?

During the administration a beneficiary owns nothing specific. HMRC’s Capital Gains Manual at CG30760 explains that a legatee holds only a chose in action, a right to have the estate properly administered. CG30750 states that gains or losses on sales of estate assets between the death and the ascertainment of residue accrue to, and are assessable on, the personal representatives and nobody else. The one exception is where the personal representatives have taken specific steps to vest the asset in a legatee before it is sold. The gain is then the legatee’s, and the personal representatives can only be involved in the sale as bare trustees.

When an asset passes to a person acquiring it as legatee, section 62(4) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) says that no chargeable gain accrues to the personal representatives and that the legatee is treated as if the personal representatives’ acquisition had been theirs. Section 62(1) deems the personal representatives to acquire the assets at market value at the date of death, so the beneficiary inherits that date and that value. Section 64(3) widens the meaning of legatee to include assets appropriated in or towards satisfaction of a pecuniary legacy or any other interest or share under the will or intestacy, so an appropriation in place of a cash legacy is covered too.

Base cost and the uplift on death are covered in capital gains tax on death. This page is about the choice of who makes the sale.

How is a sale by the personal representatives taxed?

  • Rate. GOV.UK states that trustees and personal representatives of someone who has died pay 24% on gains from 6 April 2026. There is no lower rate band.
  • Annual exempt amount. Section 1K(2) sets the annual exempt amount at £3,000. Section 1K(7) gives it to the personal representatives for the tax year of death and the next two tax years, and CG30600 confirms that none is due for any later year while the administration continues. It is one allowance for the estate, however many beneficiaries there are.
  • Costs of establishing title. CG30570 lets personal representatives in England, Wales and Northern Ireland deduct either their actual costs or a scale allowance. For a gross estate between £90,001 and £400,000 the scale is 1% of the probate value of the assets sold.
  • Losses. CG31180 says unused losses of the personal representatives cannot be carried across to a beneficiary.

More on returns and payment during the administration is in income tax and CGT during estate administration.

How is the beneficiary taxed if the asset is appropriated first?

CG31180 says the normal rules apply to the beneficiary, with the asset treated as acquired at the date of death at the value at which it passed to the personal representatives. The beneficiary uses their own annual exempt amount of £3,000 and their own rate: GOV.UK states that for gains from 6 April 2026 an individual pays 18% on gains that fall within the basic rate band, which is £37,700 for 2026 to 2027, and 24% above it.

Where several beneficiaries become joint owners of one asset, or a shareholding is split between them, CG31140 says each takes an appropriate fraction of the value of the whole holding, not a discounted value for a minority share. HMRC’s own example is a 60% shareholding worth £60,000 split three ways: each legatee’s cost is £20,000, not the £2,000 a 20% holding would have been worth on its own.

The beneficiary cannot deduct the personal representatives’ costs of establishing title, but section 64(1) allows the incidental costs of transferring the asset to them, whether incurred by the beneficiary or by the personal representatives.

If the legatee is the trustee of a trust created by the will, CG31100 confirms the trustees are legatees too. They pay 24% and GOV.UK gives trusts an allowance of £1,500, so appropriating to a will trust rarely saves tax on its own.

How does an appropriation actually happen?

In England and Wales, section 41 of the Administration of Estates Act 1925 lets the personal representative appropriate any part of the estate in or towards satisfaction of a legacy or other interest. Where the appropriation is for a person absolutely and beneficially entitled in possession, that person’s consent is needed.

CG30900 explains that legal title passes by assent, which may be inferred, or for chattels by delivery, but an assent to the legal title of real property must be in writing. For capital gains purposes HMRC looks at beneficial ownership, and CG30940 accepts that beneficial ownership can pass before the legal paperwork is complete. Even so, the safest evidence is a written appropriation or assent, signed and dated before the sale, with the beneficiary’s consent and the asset recorded in the estate accounts as distributed.

What counts is the order of events. Under section 28 TCGA 1992 a disposal under a contract takes place when the contract is made, not on completion (see when a disposal happens for CGT). An appropriation signed after exchange is too late, because the personal representatives have already disposed of the asset.

Scotland is different. CG30920 notes there is no assent, and unless the will gives the executors power to distribute before residue is ascertained, HMRC may argue that only a revocable distribution was made, which it would not accept as vesting beneficial ownership.

When does selling inside the estate work out better?

  • Inheritance Tax relief for a fall in value. Under section 191 of the Inheritance Tax Act 1984, the appropriate person can substitute the sale price for the probate value of property sold at a loss within the relief period. IHTM33050 states that no relief is due if the personal representatives transfer the property to a beneficiary who then sells, because the beneficiary is not the appropriate person and the personal representatives have not sold. The same applies to quoted shares and unit trusts under section 179: IHTM34011 requires the sale to be made by the appropriate person within 12 months of death.
  • The estate needs cash. If debts or tax must be paid, assets may have to be sold anyway. CG30770 warns that where a legatee pays the estate’s liabilities in return for receiving an asset, the Court of Appeal in Passant v Jackson treated that as a sale, not a transfer to a legatee.

How might the numbers compare?

Illustration only. Shares in a listed company were worth £200,000 at death. In 2026 to 2027, within the first two tax years after death, they can be sold for £236,000. The residue passes equally to three adult children. Costs are ignored.

Route Gain Allowance Taxable Tax
Personal representatives sell £36,000 £3,000 £33,000 £7,920 at 24%
Appropriated, each child sells (basic rate band unused) £12,000 each £3,000 each £9,000 each £1,620 each, £4,860 in total
Appropriated, each child a higher rate taxpayer £12,000 each £3,000 each £9,000 each £2,160 each, £6,480 in total

The saving comes from three allowances instead of one and, for basic rate beneficiaries, the 18% rate. If the shares had fallen in value instead, the comparison would turn on whether a section 179 claim for Inheritance Tax was worth more than the beneficiaries’ capital losses.

What happens to losses?

If the personal representatives sell at a loss, the loss can only be used against the estate’s own gains, and CG31180 confirms it cannot pass to a beneficiary. Appropriating an asset that is standing at a loss lets the beneficiary realise the loss personally and set it against their own gains. Losses made by the deceased in the tax year of death are separate: section 62(2) allows them to be carried back against the deceased’s gains of the three previous tax years.

What mistakes come up most often?

  • Exchanging contracts before the appropriation is documented, so the gain stays with the estate.
  • Treating a beneficiary who funds the estate’s debts in return for an asset as a legatee, when Passant v Jackson makes it a sale.
  • Appropriating property that has fallen in value and then finding the Inheritance Tax relief under section 191 or section 179 is lost.
  • Claiming the estate’s annual exempt amount in the fourth tax year after death or later.
  • Letting a beneficiary deduct the personal representatives’ costs of establishing title.
  • Forgetting reporting: GOV.UK requires any tax on UK residential property to be reported and paid within 60 days of completion, by whoever makes the sale (see the 60 day property return). Rates are summarised in capital gains tax rates, and the sale of an inherited home is covered in selling inherited property.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.