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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5018
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I own 2 flats in the UK - no mortgage on either (I paid one

Customer Question

I own 2 flats in the UK - no mortgage on either (I paid one mortgage off and bought the other for cash) . Both are sub let and I receive about £20k a year in rent . This is my only income as I am traveling and rarely in the UK - though I still do a UK tax return and pay tax on the rental income . If I sell both or either I think I am liable for CGT at 18% - but what amount will I pay CGT on ? . One flat was bought for £130k now worth £250k the other I bought recently for cash and is cost £250k
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

Your capital gain on
Flat 1 will be (250-130) = £120k
Flat 2 will be (sale price less cost 250k).

You can deduct the costs associated with purchase and sale of the flat (e.g. stamp duty, solicitor's fee, agent's fee on sale) from the gain in arriving at chargeable gain.

You are allowed your gains allowance aginst the chargeable gain and the rest will be subject to CGT at 18%, 28% or a combination of both depending on your total income in the year of sale. Here are some calculations for your benefit

CGT calculations
Sale proceeds £250,000
Cost price £130,000
Potential capital gain £120,000
Tax year 2013-14
Gains chargeable to CGT 120,000
Annual Gains exempt allowance 10,900
Chargeable gain 109,100
CGT calculation
If income after personal allowances is >£32,010
then CGT on gain is taxed at 28% £30,548
If income after personal allowances is less than
£32,010 then some gain will be taxed at 18%
and the balance at 28% - see example below
Assume income after allowances is
(20,000-9,440) = £10,560
Chargeable gain taxed at 18% 21,450
Chargeable gain taxed at 28% 87,650
CGT £28,403

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.
Very happy so far :) .
Expert:  taxadvisor.uk replied 3 years ago.
Peter, thank you for your comforting remark.

I hope the information provided is helpful and answers your question.


If you are happy and there are no more issues I will appreciate if you would kindly rate the service I provided to ensure I get paid for it.