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bigduckontax
bigduckontax, Accountant
Category: Tax
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If my wife and I have brought a second house to do up and sell

Resolved Question:

If my wife and I have brought a second house to do up and sell and hopefully make some money, and I being a builder do the work is it beneficial for my wife to pay me for doing the work?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. Inter spousal transfers are outside the scope of UK taxation. Any work done on the house will be allowable against possible Capital Gains Tax (CGT) on disposal. There is always a danger, even if only one house is involved, that HMRC will classify the activity as trading and make any profit liable to Income Tax (IT). That is the general principle. I do hope that my reply has been of assistance. Please do not hesitate to follow up if necessary.
Customer: replied 1 year ago.
Hi Keith thank you for your quick response.
Sorry to sound a bit simple but does that mean I'm better to get paid as I do the work or better to leave it till the end and pay capital gains tax if it's greater than our yearly allowance.?
Expert:  bigduckontax replied 1 year ago.
The two allowances are very close now. For the 16/17 tax year your personal allowance is 11K and your Annual Exempt Amount [CGT] is 11.1K. It is probably better to hold until you sell and let CGT take its course at 18% or 28% or a combination of the two rates depending on your income including the gain in the tax year of sale. However, if HMRC decide that you are trading, as they well might, the point is academic and akin to the number of saints who can dance on the tip of a needle!
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Expert:  bigduckontax replied 1 year ago.
Thank you for your support.