DMH Stallard: Budget comment - CGT / death

November 26, 2025

Ingrid McCleave, a partner and tax specialist at city law firm DMH Stallard, said:

'There is huge uncertainty at the moment, with speculation that Rachel Reeves may abolish the current capital gains tax uplift on death, thereby creating a situation where the deceased’s estate may be subject to both capital gains tax at 18% or 24% on the increase in value of an investment property, shareholding, or valuable painting or antique during their lifetime and inheritance tax at 40% on its market value at the date of their death. In effect taxed twice on the same asset.

Currently, the base cost of the asset - it’s deemed cost replaces its actual original cost, thereby creating a nil gain on death. If it is abolished, capital gains tax would be due on the difference between the original cost of the asset and the market value of the asset at the date of death.

This combined with speculation that there may be an annual or lifetime cap on the amount of lifetime giving an individual can give away without it being added back to their estate on their death for inheritance tax purposes, would mean they wouldn’t be able to get the asset out of their estates before they died by giving it away to their children and surviving seven years, which is the current rule.

Gifting is currently treated as a deemed disposal for capital gains tax purposes, and capital gains is usually paid on the gift, unless it is exempt. The person making the gift must survive seven years for the gift to fall entirely outside of their estate currently.

I hope Rachel Reeves does no more than tweak the survival period requirement period, perhaps to ten years and does not make it impossible for people to plan and reduce their inheritance tax bill.'