Lasting powers of attorney vs deputyships: What happens if you can no longer make decisions?
Learn the differences between LPAs and Court of Protection deputyships and why planning ahead matters for your future and family.
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Recent changes to Capital Gains Tax could impact what your loved ones inherit. Find out how to plan ahead and protect your estate.
Wills, Trusts, Tax and Probate|09 June 2025
Insight
Not long ago, capital gains tax (CGT) could be largely ignored or sidestepped by most people, thanks to principal private residence relief on home sales.
For this reason, CGT was often perceived as a tax affecting only the poorly advised or the wealthy, as careful use of ISAs and the annual exempt amount (previously £12,300) could eliminate most liabilities.
So, what has changed? Between April 2022 and April 2024, the CGT annual exempt amount was reduced from £12,300 to £3,000. Married couples, who could previously make gains of nearly £25,000 tax-free, now have just £6,000 of joint exemption. It’s now surprisingly easy to trigger CGT, and at rates of up to 24 per cent, the surprise can be a very unwelcome one indeed.
It isn’t just individuals who should be concerned. CGT also applies to sales of property after death, and estates can now face eye-watering tax liabilities of up to 24 per cent, costs that wouldn’t have arisen before 2022.
Virtually all estates are at risk. For example, a property valued at £200,000 at death but sold for £210,000 will, in most cases, incur CGT, with tax payable and reporting due within 60 days unless steps are taken well in advance to mitigate it. Before 2022, such a gain was exempt, and smaller estates usually escaped liability, but sadly, those days are gone.
With all this in mind, obtaining accurate property valuations is now crucial, as even small errors can lead to CGT being overpaid or underpaid. The point at which CGT liability becomes fixed is the exchange of contracts, not completion, meaning that measures to reduce tax must be taken beforehand. For example, it may be possible to allocate gains across multiple taxpayers to reduce the overall burden – but this must be arranged in advance.
Once contracts are exchanged, it’s often too late to restructure the transaction, so early professional advice can make a significant difference to the final tax bill, avoiding the disappointment of beneficiaries.
As the inheritance tax net tightens, more people are looking to give away assets during their lifetimes, but some discover too late that gifts of property are treated as a sale for CGT purposes, leaving no option but to pay the tax. However, there are still effective ways to plan ahead. Trusts can help defer or reduce capital gains tax liability on gifts and limit the inheritance tax on your estate.
With the right structure in place, the savings made can repay the costs of setting up and managing a trust while also offering protection for assets in an uncertain future.
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To find out how trusts could help protect your estate, contact our Wills, Probate, Tax & Trusts team using the form below.
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