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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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A property valued at £60k for probate in fin. year 1999/2000.

Resolved Question:

A property valued at £60k for probate in fin. year 1999/2000. £10k has been spent on improvements. Est sale proceeds in fin. year 2014/15 £160k How is "indexation" calculated now and what is the likely CGT payable ? This years CGT allowance is available in full.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.

Hello, I'm Keith and happy to help you with your question.

Firstly, there is no indexation for CGT, that went over 2 decades ago (30 November 1993), sorry.

The cost of improvements are added to the probate value to increase the acquisition price and thus reduce the ultimate capital gain. CGT computation might be 60K + 10K = 70K - 160K leaves a gain of 90K subject to CGT less the Annual Exempt Allowance on 11K leaves 79K to be assessed for the tax. This will be levied at 18%, 28% or a combination of the two rates depending on the vendor's income plus the sale price in the year of sale. Worst case scenario is a tax bill of just over 22K.

If the owner lived in the premises at any time during the ownership Private Residence Relief would reduce the liability proportionately.

I do hope I have been able to help you with your question.

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