Many thanks, ***** ***** most interesting.
If I transferrred house into solely my wife's name, would it matter if the sale occurred immediately after this? Or does there need to be any period between transfer and sale?
I am sorry to intervene - however
My colleague advises 'Transfer between spouses is currently exempt from CGT.'However this applies to spouses who are still living together in marriage for which you advise that you are not, therefore the last occasion that a transfer would have qualified for this exemption at face value would have been in the actual tax year of separation - see advise here from HMRC from the main Helpsheet 281
This clearly states that the transfer is liable to capital gains unless the asset has been considered as a part of a court order or separation order at the time of separation (or within the tax year of separation) HMRC exact position states
If a transfer occurs between you and your spouse or civil partner after the end of the tax year in which you stop living together, there are rules to decide the date of disposal and the amount of consideration on disposal.These rules depend on your particular circumstances and the information you will need is
:• the date of any decree absolute or dissolution of the civil partnership
• the date of the court order if the asset was transferred by such an order
• the date of any other contract under which the asset was transferred.
Which basically means if no provision was put in place in the tax year of separation (with any of the above legal remits) then a capital gain position on any asset transfer after the tax year of separation is treated as liable to capital gains tax.
So the question is, was this the case in your situation , if NOT then I am afraid the advise you have been offered is not correct. And I felt it was essential you knew this as this mistake would prove to be a costly one to you, which I am sure you would appreciate being aware of
Let me know if you have any follow up questions - if you would prefer me to answer - just state that in your response as I do have 26 HMRC experience and also run my own accountancy business and capital gains is one of my expert fields.
Its the provisions for the assets that has to be formalised in the year of separation - the separation is already formal due to the fact it was one of a permanant nature.
Sadly you canot twist the words around to make this sitation fit - and you had already been advsied that capital gains were due by the local solictor - and here is a solicitor that does know his tax! (not often that happens I can tell you!)
If I thought my colleague was correct in his understanding of capital gains I would not have intervened - as this just leads to unnecessary confusion.
But my advise at this point is to telephone HMRC to get the clarification, its no point you being banded about here - ring HMRC as soon after 8am or as close to 8pm (better chance of getting through quickly) on Telephone: 0300(###) ###-####
This is the main Income tax helpline - so as this relates to Capital gains you will probably have to be given a call back, as not all officers are able to deal with Capital gains queries, but then you formally have the correct advise and that's all I want -
HMRC are always happy to put in writing what has been discussed over the telephone - to formalise the call for both them and you!
Many thanks, ***** ***** essential information but rather disappointing! Looks like I might have a bit of a problem, previously unexpected in my naivity!!
I am sorry to be a bearer of basnes, but I am sure you would rather get matters right now - and just suffer the tax - than get it wrong, and leter owe the tax with penalties and intetest.
I would avise however that you will be due tax releiffor the time you lived there and the last 18 months of ownership - and this will apply to half of the gain made (your share) between the purchase and the disposal (transfer) date
Plus any costs for buying (half share) and transfer (your full share) and half the costs of any capital improvements such as new bathroom or a consevatiry etc all go towards reducing the gain.
And after all of that teh first £11,000 is exempt as this is your annual exemption allowance - so it may not be as bad as you fear
If you want some ideas of nubers do feel free to come back to Just Answer and if you would prefer to ask for me "Sam Tax" I would be happy to assist - so you know what to expect in terms of the tax due.
Make sure you alert HMRC of the tarnsfer so they are aware to expect the capital gain computation within a self assessment tax return (if you do not already complete one)