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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am completing CGN 6 along with my SA 108 (Capital gains

Customer Question

I am completing CGN 6 along with my SA 108 (Capital gains summary). I would like a second opinion on my figures prior to submitting them to HMRC. I purchased the house in December 1991 and sold it in June last year. For the first 4 years of ownership it
was our sole residence in this country. During that time we were living and working abroad but used this house for our vacations. During the first 4 years of ownership it was not let or rented out. from February 1996 up to the time it was sold it was rented
out. I have calculated the gain after buying and selling cost and capital upgrades were deducted as £154125. I calculated the PRR as 5.5/22.5 x 154125 =37675 I calculated the letting relief as 18/22.5 x 154125 = 123,300 The letting relief should I understand
be the lower figure of either the PRR figure or 37675 OR 40000 (Relief under TGA92/S223(4) OR gain arising by reason of letting 18/22.5 x 154125 = 123300. Clearly the lower of the three figures is the 37675. So the total relief allowable is 37675 from the
PRR and in addition another 37675 from the relief for letting bringing the total relief to 75350. Following the example 4 in CG64737. So the net gain is 154125 - 75350 (2 x 37675) = 78775. Is this correct.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.
Let me take a look at this and I'll get back to you. I may need to ask for more information.
Expert:  TonyTax replied 2 years ago.
Hi again.
Can you give me a little information about your time abroad please. Were you or your spouse sent abroad by an existing employer? Did you reoccupy the property before it was sold or could you not because you were moved elsewhere due to work commitments?
Customer: replied 2 years ago.
I lived and worked abroad between January 1980 and June 2014 when I retired. I have had an NT tax coding (Non resident not ordinarily resident) throughout the period 1980-2014. I did not reoccupy the house on my return (I chose not to) as during that time while I was abroad I purchased other properties some were BTL and one was my main residence. My wife was with me for the most part while we lived abroad however she came back to the UK in 2010 to look after her mother.
Customer: replied 2 years ago.
One other thing. This house was jointly owned (me and the wife) how do we go about splitting the figures so that we each get the £11000 annual CGT allowance.
Expert:  TonyTax replied 2 years ago.
Thanks.
Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.
Hi again.
Your figures were fine.
I'm assuming that you each have an identical record of ownership of the property.
Your respective shares of the gain are £77,063/2. Main residence relief and last 18 months relief is £18,838. Letting relief is also £18,838. The net gain is £39,387/6. You each have an annual CGT exemption of £11,000 for 2014/15.
I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 2 years ago.
You should each complete a self-assessment tax return with identical figures for the property disposal. It doesn't always work out like that as letting relief is up to £40,000 per part owner, not per property.
Customer: replied 2 years ago.
It doesn't always work out like that as letting relief is up to £40,000 per part owner, not per property. Can you clarify this please.
Expert:  TonyTax replied 2 years ago.
I was merely pointing out that with letting relief on a jointly owned property which has been a main home and let, letting relief is up to £40,000 per part-owner so its always a good idea to divide the gain before you start working out reliefs. In your case, it made no difference.
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Customer: replied 2 years ago.
OK thanks