How do i claim letting relief.

mirrorcarp_2

Hi

I am a self employed carpenter and i am in the process of filling out my tax return for the year.

On 30/08/1997 i purchased a house for £56 500 and lived there with my wife until sept 2006 when we purchased another house and rented the 1st one out until we sold it last july for £163000.

My tax calculation i believe is

Purchased Aug 1997 £56 500
Rented from Sept 2006
Sold July 2013

So (111months + 18) = 129 months living there
against 189 months of ownership. After fees etc my gain is £102 213.00

Gain = £102 213.00
129/189 = 68.25 = £69 761.74 PPR

I want to claim £32451.26 Letting Relief

Assuming this is correct how do i actually word this on my return. I understand i have to do a computation so do i have to explain that i want to claim the above relief and write out the calculation for them.
Also as the property was jointly owned does my wife have to do a return or can i just put it all on my own return. She is employed and does not usually do a return.

I could of course go to an accountant but it is only this part of the return i am unsure about.

Any help would be gratefully received.

00ec25

your calculator and calculation appears to be having an off day

1. it is jointly owned, your wife is not your chattel and so must account for her own finances in her own name - that is what independent taxation and women's lib is all about

2. Aug 1997 to July 2013 is 192 months not 189.

3. Aug 97 to Aug 06 incl is 109 months lived in not 111. It was then let from sept 06 inclusive

the correct calculation is therefore:

Gross gain after costs: 102,312, jointly owned therefore your share is 51,106.50

Private residence relief : 51,106.50 x ((109+18) / 192) = 33,804.82
Letting relief, lower of:
a) 33,804.82
b) 51,106.50 x (192 - (109+18) / 192) = 17,301.68
c) 40,000

net taxable gain: 51,106.50 - 33,804.82 - 17,301.68 = ZERO. No need to use any of the personal allowance (13/14):£10,900 and obviously therefore no tax to pay

as it appears you are already required to do a tax return see here then you must show the above figures on the CGT page (see SA108) since, although no tax is due, you are required to report transactions whose value is more than 43,600 (ie 4 x 10,900).
Box 31 proceeds (163,000/2) ie enter 81,500
Box 32 costs = 30,393.50 ie 50% of 56,500 + ((163,000 - 56,500) - 102,213)
Box 33 = zero

if your wife is not already required to do a tax return see here then she does not have to report anything as her calculation is identical to the above but in her name not yours (or joint names!)

mirrorcarp_2

Hi
Thank you so much for taking the trouble to reply and sharpening up my maths.

So on the cgt section it asks for purchase price and sale price. Do i put these figures as the full amount or 50% of it.

Also do i have to explain that i want to claim the relief. It does not appear to do the calculation for you,or ask if you have lived in the property at any time.

I cant thank people enough for helping.

purdyoaten

mirrorcarp wrote: »

Hi
Thank you so much for taking the trouble to reply and sharpening up my maths.

So on the cgt section it asks for purchase price and sale price. Do i put these figures as the full amount or 50% of it.

Also do i have to explain that i want to claim the relief. It does not appear to do the calculation for you,or ask if you have lived in the property at any time.

I cant thank people enough for helping.

The process - basically a matter of entering the information at boxes 30 onwards, ticking box 35 to claim the reliefs and providing the calculations in the additional information boxes at box 37 before putting the end result back up to box 3.

This is one of the poorest laid out forms in SA.

Read the attached, starting with CGN 15 and CGN 16 before going to CGN 9 and the next few pages.

http://www.hmrc.gov.uk/worksheets/sa108-notes.pdf

00ec25

mirrorcarp wrote: »

So on the cgt section it asks for purchase price and sale price. Do i put these figures as the full amount or 50% of it.

you are accounting for your tax position not you and your wife's joint tax position

mirrorcarp_2

Yep,read and re-read your posts and i think the penny has dropped.

Much appreciated.

purdyoaten

00ec25 wrote: »

you are accounting for your tax position not you and your wife's joint tax position

yes - left that out - 50% of every figure.

Do not hold back - I would enter every figure of the excellent layout of 00ec25's calculation in the additional information box (apart from the £10900 allowance which is claimed separately) .