CGT on 2nd property.

POPPYOSCAR

Could anyone tell me if I am working this out correctly please?

Second property bought 1987 sold 2017 so owned 30 years(360 mths) owned jointly.

Lived in for 9 years = 111mths

Rented out 15 years = 180mths

Bought for £70,000 sold for £600,000( gain £530,000)

PPR = 111+18 = 129mths 129/360 = 0.358
35.8% of £530,000 = £189,740

Letting Relief 180/360 = 0.50
50.0% of £530,000 = £265,000
Maximum allowed £40,000 x 2 = £80,000

PPR £189,740 + LR £80,000= £269,740
Gain of £530,000 - £269,740 = £260,260
less CGT allowance x 2 - £ 22.600

Total chargeable gain = £237,660

Assuming no other income

£237,660/2 = £118,830 gain per owner.

First £33,500 at 18% = £6030
Balance £85330 at 28% = £23892.40
Total CGT payable for each owner £29922.40

Thank you.

Pennywise

Where do you get the £30,000 band of lower rate CGT?

POPPYOSCAR

Is that not correct?

Should it be £45,000?

I must admit I do find it confusing!

00ec25

POPPYOSCAR wrote: »

Is that not correct?

Should it be £45,000?

I must admit I do find it confusing!

the basic rate tax band if sold before 6 April 2017 is 32,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 32k

if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be £33,500

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to the 32k or 33.5k basic rate band (as applic) you move £1 of gain into the 28% band

the actual CGT liability calculation is fine, assuming of course your facts are correct, eg. both owners lived there for the full 9 years each

POPPYOSCAR

00ec25 wrote: »

the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000
therefore assuming no income the amount at 18% in 16/17 would be 43k not 30k

if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to 43k or 45k (as applic) you move £1 of gain into the 28% band

Thank you.

I will amend my post accordingly.

Do you know if the rest of the calculation is correct?

00ec25

POPPYOSCAR wrote: »

Thank you.

I will amend my post accordingly.

Do you know if the rest of the calculation is correct?

LOL i edited my original post as you posted this , yes it is

BoGoF

00ec25 wrote: »

the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 43k not 30k

if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)

But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?

[Deleted User]

00ec25 wrote: »

the basic rate tax band if sold before 6 April 2017 was personal allowance 11,000 + 32,000 @ 20% = 43,000. Therefore, assuming no income, the amount at 18% in 16/17 would be 43k not 30k

if sold on after 6/4/17 the 18% "band" in 17/18 (assuming no income) would be 45,000 (11,500 + 33,500)

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

as "assuming no income" is impossible in reality, then for every £1 of taxable other income up to 43k or 45k (as applic) you move £1 of gain into the 28% band

the actual CGT liability calculation is fine, assuming of course your facts are correct, eg. both owners lived there for the full 9 years each

It is some time since I worked full time as a tax consultant and, as each year goes by, each change renders me more and more useless! But is what you are saying correct?

The guidance is:

It works like this:

Work out how much taxable income you've earned from your salary, pension or other type of income.
You can do this by deducting your tax-free personal allowance (£11,500 in 2017-18) from your total income.
Calculate your taxable capital gain by deducting the tax-free CGT allowance (£11,300 in 2017-18) from your profits
Add your taxable capital gain to your taxable income.

It certainly used to be the case that, in the case where there was no other income, the calculation would be as follows.

NIL income from salary, pension etc less personal allowance 11500 = NIL.
Basic rate band available against Capital Gains £33500.i.e. not £45000.
So the first £33500 is at 18% ?

Now, and it happens more and more frequently, I may not have been aware of something as I am not as up to date as I should be.

Can you confirm?

Sorry BoGoF - we crossed. So, if I am wrong, I can console myself in knowing that someone else is equally mad!!

POPPYOSCAR

BoGoF wrote: »

But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?

Yes you are right.

I have just put my figures into the Gov website and it showed the tax that would be paid.

POPPYOSCAR

[Deleted User] wrote:

It is some time since I worked full time as a tax consultant and, as each year goes by, each change renders me more and more useless! But is what you are saying correct?

The guidance is:

It works like this:

Work out how much taxable income you've earned from your salary, pension or other type of income.
You can do this by deducting your tax-free personal allowance (£11,500 in 2017-18) from your total income.
Calculate your taxable capital gain by deducting the tax-free CGT allowance (£11,300 in 2017-18) from your profits
Add your taxable capital gain to your taxable income.

It certainly used to be the case that, in the case where there was no other income, the calculation would be as follows.

NIL income from salary, pension etc less personal allowance 11500 = NIL.
Basic rate band available against Capital Gains £33500.i.e. not £45000.
So the first £33500 is at 18% ?

Now, and it happens more and more frequently, I may not have been aware of something as I am not as up to date as I should be.

Can you confirm?

Sorry BoGoF - we crossed. So, if I am wrong, I can console myself in knowing that someone else is equally mad!!

Can I ask if my CGT calculations are correct?

POPPYOSCAR

BoGoF wrote: »

But the personal allowance cannot be offset against the Capital Gain so only 33,500 would be chargeable at 18%?

I have amended it to £33,500.

Are the rest of the calculations right please?