CG37910 - Separate settlements: appointments while estate in administration
A will may set up a discretionary trust and specify that the power of appointment is to be exercised within two years of death. This is because IHTA84/S144 treats the exercise as if it had been provided for in the will. There are no special Capital Gains Tax rules for this situation. This exercise is not a deed of variation, but a normal exercise of a power of appointment. See CG31432+ for the CGT treatment if the power is exercised before residue has been ascertained or assent given. Otherwise the normal Capital Gains Tax rules apply.
The IHT treatment is explained in IHTM35181+.