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Jamie-Law
Jamie-Law, Solicitor
Category: Property Law
Satisfied Customers: 1324
Experience:  Solicitor
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I am trying to calculate tax on profit from a sale of a

Customer Question

Hi, I am trying to calculate tax on profit from a sale of a second property. How much tax would have to be paid on a 40000 pounds profit. I believe one can make so much before being taxed?
Submitted: 2 months ago.
Category: Property Law
Expert:  Aston Lawyer replied 2 months ago.

Hi, for Capital Gains tax purposes, each individual has a yearly tax allowance of £11,100. Hence, you would have to pay tax on £38,900. I hope this assists and answers your question. Kind Regards Al

Customer: replied 2 months ago.
I don't understand your response. 40,000 minus 11,100 is 28,900 ? ? ?,
Customer: replied 2 months ago.
how much tax would one be expected to pay?
Expert:  Aston Lawyer replied 2 months ago.

Hi, I do apologise- I did mean £28,900. Are you a higher rate tax payer? Kind Regards Al

Customer: replied 2 months ago.
Im not sure, how much does one have to be earning to pay a higher rate? Also if I paid off some mortgage arrears from the profit does that affect the tax charged?
Thank you
Expert:  Jamie-Law replied 2 months ago.

Hello my name is ***** ***** I will help you with this.

Mortgage arrears does NOT come off. If you are working as that counts towards your allowance.

You are entitled to: £11,100 tax free.

Therefore on £40,000 tax is payable minus £11,100 on £28,900 of profit.

The rate you then pay depends if you are working. Whatever you earn plus this £28,900 profit goes towards your total income figure.

So if you earn £10,000 a year, the £28,900 is added so total income would be £38,900 for the year.

You pay 18% tax on the profit for the house up to income bracket of £43,000

Then you pay 28% tax on any amount thereafter.

Can I clarify anything for you about this today please?

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