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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 5112
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
Type Your Tax Question Here... is online now

I have just received a income tax bill for approx £4000.

Customer Question

I have just received a income tax bill for approx £4000. This was because I was off sick long term, with reduced pay but also getting Sickness allowance from the government. (which they forgot to tax me on).
Is it possible to offset this on the loss I am making on selling a property?
I have used the website to work out the potential CGT I would owe when i sell, but it is telling me that I am making a loss.
The property was bought in 2007 for £167,000.
We moved out and started to rent the property in 2014, it was then worth £215,000 - £220,00.
We are selling the property for £265,000.
So the questions are, what CGT would i owe on the sale of the property, if any?
If the CGT is a loss, can i offset the income tax I owe against this lose?
Submitted: 1 year ago.
Category: Tax
Expert: replied 1 year ago.

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.

Expert: replied 1 year ago.

Thank you for your question.

Please advise

- month in 2007 the property was bought.

- month in 2014 the property was first let

- confirm the property is still let (or advise month and year you ceased to let the property

- if the property is jointly owned or in your sole name

Many thanks

Customer: replied 1 year ago.
I have never filled a tax return in before, as not sure i have needing to. I work for Ford Motor Company who organise my tax.
The property is owned with my brother.
He does not have a taxable income. He is registered disabled after an incident during an operation. he recieved a lump sum payout from the nhs, and recieves a yearly payout from the nhs, also PIP. He does not claim any other benefits.The property was bought in May 2007, let in May 2014.Approx 27,500 has been spent on building work during the time i lived there.
Customer: replied 1 year ago.
the property is going through the sale now.the plan is to complete the sale in 5 weeks time.Thanks
Expert: replied 1 year ago.

Thank you for your reply.

Based on information provided, you would make a capital gain of £70,500 on sale of property,

The whole gain is covered by private residence relief covering the period the property was your main residence and letting relief (available if you sell a property that was your main residence at some point and also let during the period of ownership. There in no CGT payable.

More information on private residence relief can be found on HS283 here

If you had made a loss on sale of property, you would report the loss by completing a tax return and this loss is available for offset against future capital gains.

Although there is no CGT payable on this sale, nevertheless you have to report the gain by completing supplementary pages SA108- Capital gains summary together with the main tax return. As the sale is taking place now, the gain would be reported next year when you file tax return 2017 (tax year ending 5 Apr 2017).

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Expert: replied 1 year ago.

Calculations with more information and some corrections.

No change is CG calculation.

Many thanks

Customer: replied 1 year ago.
does this mean that I could offset the income tax bill i have against this?
Expert: replied 1 year ago.

Thank you for your reply.

I am sorry to say, you can't offset income tax bill against capital gains/losses.

You will make a capital gain but there would be no CGT payable as all gain would be covered by reliefs available.

You income tax bill is arising from the fact there was income in excess of your personal allowance that was not taken into account when calculating your income tax liability initially.

I hope this answers your question.