CGT return – Have I got this right and can I use paper?

CGT return – Have I got this right and can I use paper?

10:24 AM, 10th May 2022, About 3 weeks ago 28

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My net income for the tax year ending April 2021 will be £20,000 and I expect it to be the same next tax year ending April 2022. However, I now have a vacant property and am considering selling it.

I have roughly worked out that after initial purchase costs, legal/agent fees, CGT allowance etc that my “net capital profit” after these deductions will be £54,000.

My understanding is that £54,000 is added to my net income of £20,000 and that means I will pay CGT at 28% (not 18%) is this correct?

Also what counts as capital expenditure for CGT purposes would it be a new kitchen, new boiler and rads and new bathroom not claimed for out of rental income for income tax purposes?

Also, as I use my son’s pc when he is home I have only been able to find CGT to be done online – there does not seem to be a paper form which I would prefer. Does anyone know how to get one?

Many thanks

Jackie



Comments

by Dylan Morris

13:00 PM, 12th May 2022, About 2 weeks ago

“Also what counts as capital expenditure for CGT purposes would it be a new kitchen, new boiler and rads and new bathroom not claimed for out of rental income for income tax purposes ? “
If this expenditure is to replace old kitchen, bathroom, new rads and boiler etc, to bring up to standard for your existing rental property surely you would claim these as the usual maintenance/renewal costs in you annual self assessment return and not CGT when property eventually sold years later ? Or am I missing something here ?

by Mark Alexander

13:05 PM, 12th May 2022, About 2 weeks ago

Reply to the comment left by Dylan Morris at 12/05/2022 - 13:00
Hi Dylan

You mention “ new kitchen, new boiler and rads and new bathroom not claimed for out of rental income for income tax purposes”

Why were they accounted for in this way if you were just replacing them with ‘like for like’? On that basis you could/should have offset them against rental income and would probably have been better off for tax purposes

Assuming you have proper receipts for these items and you are able to argue they were improvements as opposed to repairs and renewals I think it is possible to offset these as capital investments.

Do you not have an Accountant to advise you on such matters?

Regards

Mark Alexander

by Olls63

15:17 PM, 12th May 2022, About 2 weeks ago

As my namesake said I think you might have missed out on that expenditure. The HMRC Property Income Manual is quite explicit on what is capital expenditure. PIM2030 refers.
You might wish to take this up with your accountants.

by colette

19:34 PM, 12th May 2022, About 2 weeks ago

Reply to the comment left by Mark Alexander at 12/05/2022 - 13:05
On reading the PIM 2030, I think my expenditure originally on top of the purchase price of the building was capital expenditure. The property was dilapidated and re-possessed and had no kitchen/bathroom/heating, and was considerably less to buy than other properties in the street at that time, due to its condition. From the PIM I quote ..... "Hence the cost of buying a dilapidated property and putting it in good order is also capital expenditure. .. It isn’t necessary for all these factors to be present for the expenditure to be capital. The underlying principle is that the cost of buying a property in good condition is clearly capital expenditure. Hence the cost of buying a dilapidated property and putting it in good order is also capital expenditure." ........ Glad to hear of any other views.

by colette

19:38 PM, 12th May 2022, About 2 weeks ago

Reply to the comment left by Dylan Morris at 12/05/2022 - 13:00On reading the PIM 2030 as the property was dilapidated and had no kitchen/bathroom/heating and was under valued, then it would be treated as capital expenditure is my understanding - see my reply to Mark Alexander. However if you have any further info always glad to hear it. I should have made this clearer in my initial post - my bad

by Sanjeev Markanday

7:19 AM, 14th May 2022, About 2 weeks ago

Reply to the comment left by Nicky Kita at 10/05/2022 - 11:52
Isn't gross rental income over the tax year to be included in ones total income?

by Simon Lever

11:20 AM, 16th May 2022, About 2 weeks ago

@Sanjeev - Gross rental income less allowable expenses will give you the taxable property income. Interest is not an allowable expense for an individual but almost all other expenses are.
@Jackie (OP) - did you live in the house at any stage. If so have you taken account of principal private residence relief in your calculations? I would always suggest getting a suitably qualified accountant to prepare the computations.
@AlanW - you have to take "reasonable care" when preparing the computation and estimating the tax due. If you do not then you could be subject to penalties.For example if your income for the year is £60,000 and you estiamte CGT at 18% then that is not taking reasonable care.

by Olls63

12:00 PM, 16th May 2022, About 2 weeks ago

Reply to the comment left by Simon Lever at 16/05/2022 - 11:20
Interest is allowable as a basic rate relief in the tax computation.

by colette

18:14 PM, 16th May 2022, About 2 weeks ago

Reply to the comment left by Simon Lever at 16/05/2022 - 11:20
Thank you,sadly never lived in the house. I did see an Accountant but I think I knew more than him and was asking on here to check I had understood it right. very grateful for your input and that from others.

by AP

10:28 AM, 21st May 2022, About 7 days ago

Thank god I happened to read this thread!

The new system completely passed me by as I haven’t sold anything for about 8 years. I was preparing my end of year SA return to include a capital gain on a property sold at the end of last year. I should be able to get the CGT submission filed next week which will be just before 6 months after completion.
Will that make me just under 4 or 6 months late with the filing? (Does the clock start after 60 days?)

And does anyone know what the penalties are? I can’t find it explicitly stated on the HMRC website. Some website say it’s £100 plus any interest upto 6 months late.

Others say it’s the same as income tax - £100, interest plus £10 daily upto 90 days. And then another site said it’s £100, plus interest plus the higher of £300 or 5% of the tax after 3 months (another said 6 months!)

So I’m totally confused…


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