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bigduckontax
bigduckontax, Accountant
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CGT: I'd like to ask what the capital gains bill would be

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CGT: I'd like to ask what the capital gains bill would be for a second home with a value of £500K that is gifted to an adult child and the rough workings please. In particular, I am interested in knowing whether as the giver is on a lower rate tax band whether the whole ammount is taxed at 18% or if only a portion would be and then the remainder taxed at 28%.

Hello, I am one of the experts on Just Answer and pleased to be able to help you with your question.

Without the purchase price for the second home I am unable to calculate the possible CGT liability. Was this home let out at any time?

CGT is levied at 18% or 28% or a combination of the two rates depending on the donor's income including the gain in the tax year of disposal.

Customer: replied 1 month ago.
Good morning, thank-you for your answer. The purchase price of the first property was 85K, purchased approx 20 years ago. The property is jointly owned by parents / donors who are both on the basic rate tax band with an income of approx 15K P/A each.

The gain is 500K - 85K = 415K, that is 207.5K each. From this deduct their non cumulative Annual Exempt Amount (AEA) of 11.3K leaves 196.2K exposed to the tax. That would be in this case 29K @ 18% [5.22K] and 167.2K @ 28% [46.8K], total tax due a tad over 52K.

Customer: replied 1 month ago.
Thanks for explaining. May I ask, in terms of the total tax liability. Is the 52K you are referring to be for each donor or is 52K the total CGT liability on the whole amount?

Bad news, 52K each.

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