At what point is Capital Gain Tax due?

houmie

If I purchase funds now in July 2017, at what point do I have to pay capital gain tax? Is it only in that year when I sold them?

Let say I sell them in May 2018. Then it would be the CGT allowance of £11,000 for 2018/19 be utilised, correct?

Thanks,

G_M

Yes. Until you sell you don't know if there will be a gain (or a loss) and how much.

If you sold in May 2018, that would fall within the tax year April 2018-April 2019, so the annual allowance would be whatever the governement decides for that tax year (not yet known).

Payment would be due by Octobe 2019 (if sending a paper tax return) or January 2020 (if sending your tax return online).

houmie

Many Thanks

bostonerimus

houmie wrote: »

If I purchase funds now in July 2017, at what point do I have to pay capital gain tax? Is it only in that year when I sold them?

Let say I sell them in May 2018. Then it would be the CGT allowance of £11,000 for 2018/19 be utilised, correct?

Thanks,

Did you purchase these shares inside an ISA or a pension fund?

[Deleted User]

Hi there

I'm hoping someone may be able to help me. Sorry if this isn't posted in the correct place, as it is my first attempt!

I purchased a right to buy property from the council with my mum and dad in 2005. I lived in the property with my parents until 2014. My father then died in 2015 and currently the house is to be sold by my mum as she is moving to another area of the country. Would I be liable for any part of this process? The house is registered with the land registry in all three names, and the mortgage was also in all three names (although essentially the payments came out of my bank account, up until the balance was cleared several years ago).

Any ideas/advice would be greatly appreciated.

talexuser

Your main residence is exempt from capital gains tax.

jamesd

As one of the owners you'd be responsible for your portion of any CGT but since it was your principal private residence from 2005 to 2014 there probably isn't much CGT bill, though it does depend on the price it was purchased at and how much it sells for. Roughly, the potential CGT bill is (sale price - purchase price) * (years not living there / years since purchase). No CGT if that's less than your annual CGT allowance but you still must tell HMRC about the sale for CGT reporting if your share in the property value was worth more than four times the annual CGT allowance.

Say:
your share of sale price: 250,000 (not total price, just your share, including anything you inherited from your father)
your share of purchase price: 120,000 (including part inherited from your father)
Capital gain = 250,000 - 120,000 = 130,000

bought on 6 April 2005
sold on 5 April 2017
didn't live there from 6 April 2014 to 5 April 2017 after adding in the 18 extra months you can claim for after moving out (and assuming you're not disabled).
years not living there = 3
total years since purchase = 12
discount multiplier 3/12 = 0.25

adjusted gain = 130,000 * 0.25 = 32,500
less annual CGT allowance for 2016-17 of £11,100
CGT due on £21,400 of gain.

But you may have inherited some of it at the time of your father's death so it might not be as straightforward as this. This also ignores some potential allowances that will be important, it's just to give you some rough idea about whether you might have a CGT bill or not.

How much of the money from selling you're entitled to is dependent on whether the property was owned as joint tenants or tenants in common before your father died. There may also be some other contractual or other arrangement between you which determines how much you get. You'd also have a say in whether it's sold at all, though ultimately she could probably force a sale via the courts unless you were able to buy out her interest.

This HMRC calculator can help to tell you whether you're potentially due to pay any CGT. This is an introduction to working out your gain and a CGT calculator. HMRC also has a helpline linked from there.

First thing you need to establish is how much of the place you own. Potentially inheriting a portion of your father's ownership if you were join tenants, rather than tenants in common with the will leaving nothing to you may complicate that. It's also quite likely that whoever handled his estate didn't correctly handle how the property passed, a prime sign of that being if the three of you are still listed as owners at the Land Registry, instead of having had that changed to reflect how the property ownership passed at his death. Find out, it's not expensive to get the current Land Registry record and there's even a Land registry rep here who can help with any questions you have.

Then get some idea of the potential value now to get a rough estimate of selling price to get a rough estimate of whether there might be a capital gains tax bill due. Accountants are the group who can help you to calculate this sort of thing and it's best to get help from one before selling in case they can suggest ways to reduce the potential tax bill. For example, did you know that renting a place out for a little while can greatly reduce the capital gains tax bill, via something called letting relief? Just six months with a tenant in there can save a lot of money.

Once you have even rough numbers for how much you own and the price and value the Cutting Tax section should be able to help. The House buying, renting and selling section may be able to help you with the ownership and inheritance parts of what you need to know.

Get the professional advice of an accountant. It's far too likely that you will avoidably lose a lot of money if you don't.

xylophone

You bought as joint tenants, remained joint tenants and owned as joint tenants at the time of your father's death?

You still own the property as joint tenants?


http://www.taxcafe.co.uk/resources/letsgettogether.html

https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2017--2

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/capital-gains-tax-enquiries-for-individuals-employees-and-self-employed

You could write to the above, setting out the facts, and asking about your liability.

Land_Registry

You already know that it is registered in all 3 names so the legal ownership now rests with your and your Mother for registration purposes.

The issue of who has what % share and what has happened to your late Father's % share will relate to the beneficial ownership. So too does the JTs/TIC aspect mentioned so I'd suggest starting with what arrangements oyu all put in place when you took out the mortgage and bought the property - did you enter into any deed of trust for example or write your wills so that X, Y and Z happened etc

And then did anything change between then and your Father's death or since to amend any arrangement/agreement

00ec25

talexuser wrote: »

Your main residence is exempt from capital gains tax.

but it has not been the main residence since 2014.
2014 + 18 months is not enough to get to today so he has a liable period

[Deleted User]

Hi there


Thanks for all the feedback. The house was valued at £54,000 when purchased, however due to council discount the actual price of purchase was £29,000 (although quite a large amount of renovation work has taken place, however I have no idea about receipts etc!!!!)

The house has just sold for £84,000 and is processing via the solicitor. However at the time of my father's death there were no will's etc in place, and therefore his share will have transferred over to my mother I assume. The title deed's are in joint names by the way.

Hope this helps. This is all new to me so if someone could provide more advice based on this info or requires more details please let me know.