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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hello. I am declaring a Capital Gain under the HMRC Property

Resolved Question:

Hello. I am declaring a Capital Gain under the HMRC Property Sales Campaign. I sold a buy to let property in July 2007 with a net gain (after allowable expenses) of £78,235. I did not receive any other taxable income in 2007/08 when I was a self employed property sourcer.

Can I use my Personal Allowance to offset some of the gain, as well as the CGT Allowance for that year which I believe was £9,200?

Am I right in thinking that the CGT tax would be calculated as follows:

1st £2,230 @ 10%
Next £34,600 @ 20%
Bal. £32,205 @ 40%

I have seen somewhere that for 2007/08 the CGT is a flat 10% with taper relief (I owned the property for 5 years, so % of gain chargeable would have been 85%). Does this apply to something different??

Thank you.

Malcolm
Submitted: 4 years ago.
Category: Tax
Expert:  TonyTax replied 4 years ago.

Hi.

I'm afraid that you cannot use your personal allowance against your capital gain. If you owned the property for five complete years before selling it, the taper relief will be £11,735 (15%) reducing the gain of £78,235 to £66,500. The effective rate of CGT of 10% applied to gains on the disposal of business assets, not buy to let property I'm afraid. Information on taper relief can be found here.

Your taxable gain will be £57,300 (£66,500 - £9,200). The first £2,230 will be taxed at 10% (£223), the next £32,370 will be taxed at 20% (£6,474) and the balance of £22,700 will be taxed at 40% (£9,080). That gives you a total liability of £15,777. See here for how the 20% tax band is used.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 years ago.

Ok, thank you. I have informed HMRC that I need to make a disclosure (yesterday). Am I right in thinking I now have until 6th September to make that disclosure?


 


How should I play 'The Letter of Offer' on the disclosure form? I do not have the funds right now to pay off the £15,777 so would like to come to an arrangement with HMRC to pay monthly. Any suggestions please??

Expert:  TonyTax replied 4 years ago.
As it says here, you have until today 9 August 2013 to make a notification of your intention to make a dislcosure of your gain. You then have until 6 September 2013 to make the disclosure and pay the tax.

You need to contact HMRC before 6 September 2013 to negotiate a payment plan. What you will be able to achieve in that regard will depend on your financial circumstances. Every case is different so I cannot really telll you what HMRC will agree to I'm afraid.
Customer: replied 4 years ago.

Presumably it is only worth offering them a lower sum if I am able to make a payment in full??

Expert:  TonyTax replied 4 years ago.
HMRC doesn't give discounts on tax liabilities I'm afraid.
Expert:  TonyTax replied 4 years ago.
I have to go out for a while so I will deal with any queries you may have on my return.
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