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 months 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

Olls63

10:36 AM, 21st May 2022, About 3 months ago

Reply to the comment left by AP at 21/05/2022 - 10:28
You have 60 days from the date of conveyance to report your disposal and pay any tax due. You’ll get a late filing penalty and be charged interest if you do not do this by the 60-day deadline.

If you miss the deadline by:

up to 6 months, you will get a penalty of £100
more than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater
more than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater

AP

11:02 AM, 21st May 2022, About 3 months ago

Reply to the comment left by Olls63 at 21/05/2022 - 10:36
Thank you Olls63. That’s what I originally thought, then I realised I was reading the page for CGT penalties and non residents on the HMRC website. There wasn’t a similar at page for residents (that I could find).

This website states that the rules of Schedule 55 apply (near bottom of page under ‘Penalties for late filing of online property disposal returns’)

https://www.rossmartin.co.uk/penalties-a-compliance/penalties-appeals/365-tax-penalties-failure-to-make-a-return-late-filing

Do you know where the correct information on HMRC or Gov website might be?

Olls63

11:22 AM, 21st May 2022, About 3 months ago

Reply to the comment left by AP at 21/05/2022 - 11:02
What I wrote is from the HMRC website
Same rules for residents/non-residents

AP

11:30 AM, 21st May 2022, About 3 months ago

Reply to the comment left by Olls63 at 21/05/2022 - 11:22
Thanks so much Olls63 - just want to be prepared for the penalty!

colette

22:27 PM, 21st May 2022, About 3 months ago

As the original poster and a single person, just another thought that entered my head. If I sell half of a mortgage free rental property to a non relative for cash, less the allowed deductions, then I can use this year's cgt allowance against that half and then if I sell the other half after next April I can use that cgt allowance, meaning I have used just over £24k in ctg allowance for the same property. Am I correct i thinking this?

Mark Alexander - Founder of Property118 View Profile

23:25 PM, 21st May 2022, About 3 months ago

Reply to the comment left by colette at 21/05/2022 - 22:27
Yes, but it would probably be a false economy by the time you factor in legal fees and the Stamp Duty your relative would pay to buy half. Also, to sell half you would first need to repay any mortgage

colette

19:54 PM, 22nd May 2022, About 3 months ago

Reply to the comment left by Mark Alexander at 21/05/2022 - 23:25
Thanks Mark for confirming it can be done, but as she has no existing property (so no land transaction tax) and half the value would under the LTT limit for Wales (£180k) and there is no mortgage as mentioned and local solicitors charge £275 inc to do a transfer, then I think it might save me quite a sum. I assume it would be treated as a "transfer" with the relevant transfer deed.

Mark Alexander - Founder of Property118 View Profile

20:01 PM, 22nd May 2022, About 3 months ago

Reply to the comment left by colette at 22/05/2022 - 19:54
It would be treated as a sale for you and a purchase for her.

I strongly recommend you both take legal and tax advice before proceeding further. Also note that she would no longer qualify for First Time Buyers LTT after this transaction.

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