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Capital gain Assistant: Thank you. Can you provide any more

Customer Question

hello, capital gain
Assistant: Thank you. Can you provide any more details to help us find you the right Expert?
Customer: I am selling my house. It was main main residence and then I went to work abroad and let it out.
Submitted: 2 months ago.
Category: Tax
Expert:  bigduckontax replied 2 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be bale to help you with your question. When you worked abroad were you occupying job related accommodation? Once I know this I can advise you further.

Customer: replied 2 months ago.
Hi Keith,
I was renting a flat. It was not provided by company. I have however received allowance against it.
Adam
Expert:  bigduckontax replied 2 months ago.

Than you Adam.

Your Capital Gains tax (CGT) calculation is a tad complex. Take the total ownership period in months, that is A. Take the letting period in months less 18 (for the last 18 months of ownership you are deemed to be in possession even if this is not the case). This is B. Now put B / A to derive a ratio of the proportion of any gain made which is exposed to CGT.

The gain is the difference between the purchase and the disposal price. The latter is the selling price less selling costs including advertising. The former is the purchase price plus purchase costs including Stamp Duty, plus enhancements eg installation of double glazing, central heating extensions etc, but not routine maintenance which, for the letting period, is allowable against rental income. This figure, times the ratio above, will be taxed 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, the calculated gain is reduced by your non cumulative Annual Exempt Amount (AEA) of 11.1K plus Lettings Relief (LR) up to 40K.

I do hope that you have found my reply of assistance.

Customer: replied 2 months ago.
Hi Keith,
My gain stands at £135k. And ratio of proportion which is exposed to CGT is 8.5%
When do I apply Annual Exempt Amount (AEA) of 11.1K plus Lettings Relief (LR) up to 40K?Do I remove exempt and relief from £135k and then apply 8.5%.
So 135 - 40 - 11.5 = 83k and take 8.5% as taxableorDo I take 8.5% from 135 = £11.4k and take relief from this?Thank you,
Adam
Expert:  bigduckontax replied 2 months ago.

Hello Adam, sorry for the delay in response.

You have a gain of 135K which at 8.5% is say 11.48K. This is a tad above your AEA, but LR will relieve it completely. This will have to be declared within 30 days of sale and the reliefs will follow automatically. You should have no CGT to pay.

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