Is it worth it after CGT?
It would seem many landlords are selling up, ‘but’ is this where capital gains tax comes in?
As an example:- I have read if a property rises in value to leave £300,000 after taking away purchase price exp’s etc. After the measly £13000, allowance taking into account the capital gains tax thresholds with rates of 20% and 28% respectively the capital gains tax bill would be around £80,000!
Have I got this right?
It would seem the rental income over the years mostly goes to the government by another name!
I believe corporation tax is slightly lower?
Many thanks
Lalo
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Member Since June 2014 - Comments: 1562
1:51 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 01/12/2021 – 12:46
From Mark’s article;
“If he still lived in the UK he would pay tax on £13 million of capital gains assuming he was to sell today, the CGT bill on which would be a whopping £3,640,000.”
Which begs the question, what part of making paying £3.640,000 of tax on £13 million of profit seems unfair to you?
(Not being holier-than-thou, I’m certainly not paying more optional CGT than I have to either.)
Member Since January 2020 - Comments: 102
5:32 PM, 1st December 2021, About 4 years ago
Reply to the comment left by DSR at 01/12/2021 – 13:42
Beware the Temporary Non Residency Trap if you return within 5 years.
Member Since January 2011 - Comments: 12193 - Articles: 1395
5:57 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Olls63 at 01/12/2021 – 17:32
I became non-resident in Feb 2016 and have no inclination whatsoever to reverse that decision.
It was possibly the best decision I have ever made, regardless of the tax!
Member Since January 2020 - Comments: 102
8:27 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 01/12/2021 – 17:57
My comment wasn’t aimed at you. More at people who may think a few years abroad may save them money.
Member Since January 2011 - Comments: 12193 - Articles: 1395
8:32 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Olls63 at 01/12/2021 – 20:27
Very true, it’s a minimum of five FULL tax years as a non-resident before any tax benefits are fully secured. It’s also very easy to fall foul of the rules if people keep popping back to the UK. If they still have lots of ties such as a home, a business, a spouse or minor children in the UK they could fall foul of the rules by spending just 15 nights in the UK. Therefore, very careful planning and quality advice is essential.
Member Since January 2020 - Comments: 102
8:43 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 01/12/2021 – 20:32I find the KPMG flowchart the best and simplest one out there
https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf
Member Since January 2011 - Comments: 12193 - Articles: 1395
8:50 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Olls63 at 01/12/2021 – 20:43
Thanks for sharing. I had not seen that one before and I agree it is very good.
Member Since January 2020 - Comments: 102
9:01 PM, 1st December 2021, About 4 years ago
Reply to the comment left by Mark Alexander at 01/12/2021 – 20:50
It is my bible!!!!!!
Member Since June 2013 - Comments: 3237 - Articles: 81
3:12 PM, 2nd December 2021, About 4 years ago
Reply to the comment left by Monty Bodkin at 29/11/2021 – 13:14
I built my current house with the PEP’s & Tessa’s from years ago if anyone can remember them, that became ISA’s as we know now.
Save this calculator for when u need to work your investments and goals out.
https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php
Member Since December 2021 - Comments: 8
11:06 AM, 4th December 2021, About 4 years ago
I think BTL is the least tax effect investment we can chose
But it can be one of the best
I personally look at all aspects of investment
ISA SiPP all have there place
But I know what has given me wealth to invest in other assets
One day all of us have to exit and that’s when we pay tax CGT is not avoidable but IHT can be avoided with planning
I never sell BTL as it’s the engine room that produces yeild