Capital Gain / need to do a tax return?

SW17

zygurat789 wrote: »

The problem is that if there is a taxable gain in excess of £11,000 then HMRC will need a full disclosure of income to enable them to tax the gain at the correct rate(s).
Surely they wouldn't just accept a verbal statement that it's all at 20%?

This is a good point, which I should have remembered. I don't know if the taxable portion of the CG would take her into higher rate, if it is >£11K, as I'm not sure how close to higher rate she is today. Though it wouldn't be relevant if the CG is below £11k, IIRC?

Nick_C wrote: »

My reading of that - https://www.gov.uk/capital-gains-tax/work-out-need-to-pay - is that it only applies if you are also claiming a loss.

....

Sometimes you need to report to HMRC even if your gains are below the tax-free allowance. Send a tax return if:

you disposed of chargeable assets with an overall worth of more than 4 times the tax-free allowance - this works out as £43,600 for the 2013 to 2014 tax year

Thanks. Based on this it sounds like she would have to do a 2014/15 return anyway if the property was sold for more than £44k (which it was), even if the CG was <£11K. Will call HMRC to confirm once I have the details.

Thanks again to all.

MrBeans

SW17 wrote: »

This is a good point, which I should have remembered. I don't know if the taxable portion of the CG would take her into higher rate, if it is >£11K, as I'm not sure how close to higher rate she is today. Though it wouldn't be relevant if the CG is below £11k, IIRC?

Thanks. Based on this it sounds like she would have to do a 2014/15 return anyway if the property was sold for more than £44k (which it was), even if the CG was <£11K. Will call HMRC to confirm once I have the details.

Thanks again to all.

Yes, if gain is <£11K there is no taxable gain so no effect on her marginal rate of tax.

If the gain is, say, £12K then the taxable gain would only be £1000. Assuming this would not push her into the 40% bracket, only 18% tax is payable on the £1000 taxable gain.

See also the section on allowable costs, which reduce any gain: https://www.gov.uk/tax-sell-property/work-out-your-gain

Please let us know what HMRC say when you have rung them.

mgdavid

Nick_C wrote: »

........Personally, I hate dealing with HMRC. If the capital gain is only slightly above the tax free allowance, I would consider reducing the selling price. .......

Did you read the OP?
'has just sold a house'

Nick_C

mgdavid wrote: »

Did you read the OP?
'has just sold a house'

I did read the OP, thank you.

People often say they have "sold their house" when they have accepted an offer and taken it off the market, but before exchange or completion.

I did not therefore assume that the OP's friend had without doubt completed the sale. The fact that the cost of sale was uncertain suggested that the sale might not have reached completion, as solicitors' fees are usually settled on completion.

The English language is widely misused, and it is simply not practical to take everything that everyone says literally.

CathA

When we sold a house and made a capital gain ( it was a second property) I wrote to HMRC and told them the figures. They accepted that any gains we had made was under the limit (think at the time it was £10,200) and said thanks very much for telling us. Never asked for a tax return. Hope this helps.