Comparison · 2026/27
Capital Gains Tax Uplift on Death vs Lifetime Gift
Holding an appreciating asset until death wipes out Capital Gains Tax on its lifetime growth — but exposes its full value to Inheritance Tax. Gifting it during your lifetime can trigger CGT now, but may let the value escape Inheritance Tax entirely after seven years. This guide compares the trade-off.
At a Glance
| Feature | Hold Until Death (Uplift) | Lifetime Gift |
|---|---|---|
| CGT on lifetime growth | Wiped out — full uplift to death value | Usually payable by donor at gift date |
| IHT exposure on full value | Yes — included in estate at up to 40% | Removed after 7 years (PET) |
| Recipient's future CGT base cost | Value at death | Value at date of gift (unless hold-over claimed) |
| CGT rates 2026/27 | N/A — no disposal on death | 18%/24% depending on asset and rate band |
| Best suited to | Assets with BR/APR relief, or short life expectancy | Assets expected to keep growing, donor likely to survive 7 years |
CGT rates for 2026/27: 18%/24% depending on the asset and your income tax band; annual exempt amount £3,000. Nil rate band £325,000. Confirm current figures on gov.uk.
How the CGT Uplift on Death Works
When an asset passes on death, the beneficiary's base cost for future Capital Gains Tax purposes is reset to its market value at the date of death. Any growth in value that occurred during the deceased's ownership is never charged to Capital Gains Tax — it simply disappears for CGT purposes, with only future growth after inheritance taxable when the beneficiary eventually sells.
The trade-off is that the asset's full value at death forms part of the deceased's estate for Inheritance Tax, potentially taxed at up to 40% above the available nil rate band, unless a relief such as Business Relief, Agricultural Relief, or the spouse exemption applies.
How a Lifetime Gift Works
Gifting an appreciating asset during your lifetime is normally treated as a disposal at market value for Capital Gains Tax, meaning the donor may owe CGT on the gain built up to that point, even though no sale has taken place. Gift Hold-Over Relief can defer this liability for certain business assets and trust gifts, passing the original base cost to the recipient instead.
For Inheritance Tax, the gift is a Potentially Exempt Transfer: if the donor survives seven years, the full value falls outside the estate entirely, regardless of how much it has grown since the gift. This makes lifetime gifting attractive for assets expected to appreciate significantly, provided the donor is confident of surviving the seven-year period.