Capital Gains Tax on Appropriation (SDLT too?)

I am instructed in relation to an estate and will use round figures for ease of reference. The value of the estate at date of death was £1m. There was a property worth £800k and cash at £200k - the total value of the estate being £1m.

One of the beneficiaries wishes for the property to be appropriated to him. The value of which is now £1m (a gain of £200k from the probate value) and will be appropriated to him at the current market value of £1m. There is no mortgage on the property.

Is CGT payable on the gain (i.e. the gain from the date of death value to the market appropriation value)? If so, who by?

Is SDLT payable by the beneficiary wishing for the property to be appropriated to them? Would a payment into the estate, so that the beneficiary can have the property appropriated count as consideration too?

FA 2003 Sch 3 para 3A provides:

A(1)The acquisition of property by a person in or towards satisfaction of his entitlement under or in relation to the will of a deceased person, or on the intestacy of a deceased person, is exempt from charge.

(2)Sub-paragraph (1) does not apply if the person acquiring the property gives any consideration for it, other than the assumption of secured debt.

(3)Where sub-paragraph (1) does not apply because of sub-paragraph (2), the chargeable consideration for the transaction is determined in accordance with paragraph 8A(1) of Schedule 4.

Malcolm Finney

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Many thanks Malcolm - I really appreciate this.