21:26 PM, 14th September 2022, About A year ago 10
My wife and I had a rental flat flooded in July 2021. It immediately became uninhabitable and remained so for a year while negotiations with our insurers were ongoing.
These were eventually settled for a sum of approximately £60,000 (for refurb costs and not including loss of rent).
As I work in the construction trade, I managed to get the flat refurbished for a cost of £35k. So we have a ‘surplus’ of £25k.
A little knowledge is a dangerous thing, of course, but some online research suggests this surplus may be taxable as a capital gain.
I have seen a reference to HMRC manual entry TGA 1992 Section 23.
However, my accountant says that it is income, not capital gain.
Obviously, as my wife and I both have annual capital gains tax allowances, it would be very beneficial to us if it was in fact a capital gain and taxed accordingly.
Would be most grateful for any input on this situation please.