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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have a question regarding my personal tax situation once

Customer Question

I have a question regarding my personal tax situation once the uk landlord tax comes in. I am a HRTP and have lost my personal allowance. My wife is a low rate tax payer with about 7k room before HRT. I own a B2L in my name. 8.4k rent pa. the capital gain since 2006 is about 30k. However the property was my residence until 2011 when most of the cap gain occurred. We then let out the flat from 2011 to the present. B2L value 175k. I am thinking of transferring into my wife's name so she can receive 100% of he rent. I need to know the CGT, SDLT and IT issues And anything else I need to consider. Cost estm at 1400 pa so net rent 7k pa
Submitted: 10 months ago.
Category: Tax
Expert:  bigduckontax replied 10 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Transfers between spouses are outside the scope of UK taxation so initially there will be no taxes due thereon and no SDLT either as there is no consideration. In the long term a sale of the property will give rise to CGT, time proportioned to allow Private Residence Relief (PRR) for the time it was your sole or main domestic residence plus the last 18 months when you are deemed to be in residence even if this is not the case. The gain is deemed to be created on an even time basis even of realities. The gain is the difference between the net selling price (ie after deduction of selling costs including advertising) and the acquisition cost. The latter is the original purchase price plus purchase costs including SDLT plus any improvements eg installation of double glazing, central heating and extensions, but not routine maintenance which is allowed against rental income during the letting period. The gain is reduced by the non cumulative Annual Exempt Amount (AEA), currently 11.1K and, as you occupied before renting, Lettings Relief (LR) up to 40K depending on the rents received. As your gain is only 30K, actually it will be proportionately less, when the PRR period is taken into account, the two reliefs will probably wipe out any gain in any event. Gains are taxed at 18% or 28% or a combination of the two rates depending on the income received in the tax year of sale. My immediate reaction is why go to the palaver of transfer with the conveyancing costs involved, unless you use a Land Registry Transfer, to avoid a tax (CGT) which will almost certainly not arise on current figures. Income Tax is the other point to be considered, particularly if you live in Scotland. There will be an annual saving of say GBP 1.4K unless. of course, you are pushed into the 45% tax bracket. I do hope that my reply has given you some food for thought.

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