Capital Gains Tax up to 40%!

IveSeenTheLight

chucknorris wrote: »

It is in addition, I sold a house in 2003 that had both been my main residence for a few years and let out for 9-10 years, so I have been through the process already and claimed both.

Is it still currently applicable though?
I'd be interested to read the government website link showing the allowance

dealsearcher

Blacklight wrote: »

One issue with this is that capital gains are usually made over time so you're taxing someone for something at a single point in time for appreciation over a long period.

You can't treat that simply like income tax.

If I worked doing a job for ten years at £5k a year but deffered all payments until the end of that period you'd tax me like I just earned £50k, whereas spread over ten years I'd pay no tax at all.

Hardly fair or just.

A very important point. Anyone who had bought ten years ago when pension funds were doing so badly might be forgiven for thinking that property investment would be better than a pension. To realise your investment gain in one tax year is a major disadvantage in this tax system. The previous nine years of tax allowances are ignored.

IveSeenTheLight

Thrugelmir wrote: »

The fact that CGT is not paid until the asset is sold. Means that the asset can continue to grow tax free over that time frame enhancing the return.

Not really a problem with that is the threshold for paying tax increased in line with the timeframe the capital gains was accumulated over i.e the allowances.

Of course "allowing" the asset to grow tax free over the time frame ensures that it goes above any individual tax year threshold

StevieJ

IveSeenTheLight wrote: »

Not really a problem with that is the threshold for paying tax increased in line with the timeframe the capital gains was accumulated over i.e the allowances.

Of course "allowing" the asset to grow tax free over the time frame ensures that it goes above any individual tax year threshold

Top slicing relief is what is required to make that equitable.

StevieJ

IveSeenTheLight wrote: »

Not as I understand it, but always open to being better informed.
If you know the link, please let me know

Here is the link

https://forums.moneysavingexpert.com/discussion/comment/32761155#Comment_32761155

http://www.lawpack.co.uk/Knowledge/Property/BuyingAndSelling/article885.asp


5. Get letting relief on your main residence.

If you move into your second property and let out your first home, you can be entitled to "private letting relief". You can exempt up to £40,000 of the gain accrued during the period that the property was let out as private residential accommodation.

Anyone who has a share in the property can claim it, so if the property is in joint names, you can claim £80,000 between you. With the main residence exemption and private letting relief, your overall capital gains tax bill can be reduced dramatically

chucknorris

IveSeenTheLight wrote: »

Is it still currently applicable though?
I'd be interested to read the government website link showing the allowance

Yes it is still current:

http://www.hmrc.gov.uk/helpsheets/hs283.pdf

IveSeenTheLight

chucknorris wrote: »

Yes it is still current:

http://www.hmrc.gov.uk/helpsheets/hs283.pdf

I've read this and don't interpret it as applicable to BTL properties.
It's applicable to properties which was your only or main residence.

Normally you get a full exemption for your residential home and this section appears to capture those that part let or let out their main home for a period.

Letting Relief
If you only get partial relief because you have let some or all of your
dwelling house as residential accommodation, you may be entitled to a
further relief. This further relief is due where:
• you sell a dwelling house which is, or has been, your only or main
residence, and
• part or all of it has at some time in your period of ownership been let as
residential accommodation.
The amount of relief is the lowest of:
• the amount of Private Residence Relief already calculated, or
• £40,000, or
• the amount of any chargeable gain you make because of the letting.
Example 8
You let 60% of your house as residential accommodation and occupied 40% as your home.
You made a gain of £60,000 when you disposed of the property. You are entitled to Private
Residence Relief for 40% of the gain – £24,000. Your remaining gain is £36,000 and it all
results from the letting. The lowest of the three limits set out above is the amount of
Private Residence Relief and so you are entitled to further Letting Relief of £24,000. Your
chargeable gain will be £12,000.

chucknorris

IveSeenTheLight wrote: »

I've read this and don't interpret it as applicable to BTL properties.
It's applicable to properties which was your only or main residence.

Normally you get a full exemption for your residential home and this section appears to capture those that part let or let out their main home for a period.

That is what we have been (in relation to this relief) talking about, i.e. properties that have been BOTH your main residence and let out. It will not apply to pure investment properties

IveSeenTheLight

chucknorris wrote: »

That is what we have been (in relation to this relief) talking about, i.e. properties that have been BOTH your main residence and let out. It will not apply to pure investment properties

As I had interpretted it

twadge_face

I think it's good to rise CGT before Income Tax. BTL is an investment just shares, albeit rather illiquid and clunky (lol!).

Unearned wealth through the BTL tax break is one of the bing social dividers instigated by the Real Nasty Party (aka New Labour).

Combine this with a true reduction in easy-to-get state benefits and perhaps we'll get to see a truly more fair Britain.