Capital gains tax

OPENSPACES

You may be interested to know that I have spoken to an "HMRC technician" and they are adamant that the 4 times limit applies if you are not required to complete a tax return. The view seems to be that if you have a change of circumstances which requires you complete a CGT return that constitutes a requirement to complete a self assessment. When I asked if they could check this was legally correct they said you can write in if you want. So I am assuming I must do it ??

bowlhead99

OPENSPACES wrote: »

You may be interested to know that I have spoken to an "HMRC technician" and they are adamant that the 4 times limit applies if you are not required to complete a tax return. The view seems to be that if you have a change of circumstances which requires you complete a CGT return that constitutes a requirement to complete a self assessment. When I asked if they could check this was legally correct they said you can write in if you want. So I am assuming I must do it ??

You said your shares had multibagged. So they have doubled or more. So, even if they have only slightly more than doubled, rather than tripled or quadrupled or x10, when you sell those shares the profit will be over half their proceeds.

Therefore, if you sell £25k of shares per person the gains per person will be over £12500 so definitely reportable and taxable because it's beyond the exemption. If you sell £30k per person then the gains will be over £15k and reportable and even more taxable due to being even further beyond the exemption. If you sell £40k per person then the gains will be over £20k and reportable and even more taxable and even further beyond the exemption.

So, you're probably not going to get to the "total proceeds are over 4x the allowance" point without making gains over the allowance - because your investments more than doubled in value and so mathematically even if your total proceeds were only 2x or 3x the allowance let alone 4x, your gains already exceed the allowance and you already have to tell HMRC what disposals you had that led to that calculated gain.

The "total proceeds > 4x the exemption" is only relevant to people who are selling stuff for relatively smaller gain percentages, eg they sold £46k of shares which had cost them £35k, ie only 31% profit on their investment cost, so over 4x exemption in sales proceeds but not over 1x exemption in profit. For people cashing in shares in a tax year with average 50% profit on their cost, 100% profit on their cost, 200% profit on their cost, 1000% profit on their cost, it's a moot point, as they will never be in a position of needing to disclose stuff that they weren't otherwise going to disclose.

[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.

Malthusian

Starting a new thread would be better than posting in a completely irrelevant one.

Your share of the property will partly depend on whether the property was joint tenants (i.e. on your father's death the property passed straight to your mum and yourself) or tenants in common (i.e. his third-share was distributed as per his Will).

On a mortgage-less property, the former would mean you've owned half since 2015 and if the latter it will depend on what his Will said - for example if he left everything to your mum, you would still own one-third and she owns two-thirds.

However, if you have put more in than them via the mortgage that complicates matters. You may have acquired a larger beneficial interest thanks to paying more in, unless you agreed otherwise.

So you will need to see a solicitor.

If there is a gain you will be liable for capital gains tax on your share in respect of the period you did not live in the property. So if you lived in it for 9 years and somewhere else for 3 you will pay capital gains tax on 3/12 = 1/4 of the gain.

[Deleted User]

Thank you. What about the annual allowance threshold? Even if I owned the property out right myself, isn't the overall gain on everything below the threshold? As it works out at less than half the annual allowance of around 11k doesn't it?

Malthusian

I have no idea as you didn't give us any of the figures.

[Deleted User]

Sorry about that. I purchased the house for £31,000 in 2005 however it was valued at £54,000 as we received discount. It has just sold for £84,000.