CAPITAL GAINS TAX AND RETROSPECTIVE PROPERTY VALUATIONS

TAX

How a valuer reconstructs market value at a historic date using contemporaneous evidence.

When a retrospective valuation is needed

Capital Gains Tax is calculated by reference to a property's value at a specific point in the past — often the date it was acquired, inherited, or transferred into a trust. Where that value was never formally recorded at the time, HMRC still expects a considered, evidenced figure rather than a guess.

The challenge of valuing at a past date

A retrospective valuation cannot rely on today's market. The valuer has to set aside current conditions and reconstruct what a reasonably informed buyer and seller would have agreed at the relevant date, based on the property as it existed then — including its condition, layout and any features that may since have changed.

The evidence a valuer draws on

This typically means researching comparable sales transacted around the relevant date, historic planning and land registry records, and any available photographs or descriptions of the property's condition at the time. Where records are incomplete, the valuer sets out clearly what assumptions have been made and why.

Why this needs to be done properly

Because CGT calculations can involve significant sums, and because these figures are often only tested years after the fact, a well-reasoned retrospective valuation — prepared to Red Book standards — gives both the taxpayer and HMRC a figure that can be explained and, if necessary, defended.