Capital Gains Tax

MaggieT_2

Hi, I recently sold my house, after the mortgage was paid off/credits cards etc. I was left with about £75K. My husband and myself are currently living in a rented property until we decide what we want to do in the future (we are both in our late fifties). The money is currently sitting in a savings account in Barclays (didn't want to tie it up until we decided what we wanted to do) - has been in there since November last year.

I have just had a letter from the Inland Revenue advising that they want me to complete a tax return every year - I have spoken to them on the phone and it would appear to be the money from my house - capital gains tax was mentioned. I used to work full time but have just reduced my hours to 30 per week, I also have a small pension from a previous employer. Husband is also employed.

I would appreciate some advice as to how much I may be liable to pay and any way to avoid it.

Thanks

Margaret

John_Pierpoint

I don't understand the suggestion of capital gains tax, as it sounds like your principal private residence, or were you renting out the property you sold?

Is the "deposit" at Barclays earning gross interest (ie with no tax taken off) It could be as it is over 50,000.
Let us say you are getting 2,000 gross each year, then you would most probably owe 400 tax on that and that is why HMRC want you to do an annual self assessment?

The tax year runs from the 6th April to the 5th of April, so expect to get a form to fill in fairly soon.

The only way to avoid paying income tax is to invest in something that pays tax free - National Savings or that pays out as capital gains rather than income as you probably have an unused 10,100 annual nil rate allowance for capital gains tax..
However such investments are not readily available if you need the money to be instantly available. The risk may be bigger than leaving your nest egg in cash.

MaggieT_2

Thanks John, No the house was empty, I had been trying to sell for nearly two years - just put it on the market at the wrong time when property sales were at their worse. Double blow because it was originally on for £150k and I ended up taking £117K just to get rid of it. I had just been married and the house was just too far for husband and I to travel for work. I moved into his rental property with a view to purchasing something between us when my house sold.

Not sure about the interest on the Barlays amount - it was put in there as a temporary measure - somewhere to bank the cheque, never intended to leave it there long term, just so many other things going on never had a chance to think about it.

I feel a bit better than I did yesterday, absolutely devastated at the prospect of loosing a chunk of money - the most I'm ever likely to get!!

Thanks again, Margaret

terryw

Assuming that the house was your PPR and you never let it then no CGT is payable.

I am guessing that HMRC are showing an interest because your address is different to the address of the property. The purchasers tax form will probably have flagged this up.

dealsearcher

Capital gains tax can become an issue if a property was valued at a certain figure at a particular time and then was sold at a higher figure later. I only am aware of this being a problem in the case of probate value of a property after death with the property selling at a higher price later.