Tax implications new build

sparkys2003

I am in a bit of a dilemma and hopefully someone will be able to give me some advice on my situation.

I am fortunate to have secured planning permission in my garden for a dormer bungalow.
However, I want to maximise what I have by building it out, living in it for 3 years as my main residence to avoid CIL levy charge (£15k) and then move back into my original house, that will have been rented out for the 3 years, and selling the new build.

My question is, am I exempt from capital gains tax doing this?
If I was to sell the original house then I would be exempt, but if I change my main residence for 3 years and then change it back to the original and sell the new build, is this still exempt?

Hope I have explained it well enough.
Thanks in advance.

00ec25

in principle yes when you sell the "new build" it would be a property on which you would claim private residence relief and that would 100% cover your CGT liability on that property

naturally the other property would have amassed 3 year's CGT liability whilst it was no longer your home, but you would be unlikely to have any CGT to pay anyway after you have offset letting relief and PRR which you can claim against that one

presumably as a Sparks you are VAT registered? In which case be careful when zero rating the new build costs to not mix them in which your "normal" work

sparkys2003

00ec25 wrote: »

in principle yes when you sell the "new build" it would be a property on which you would claim private residence relief and that would 100% cover your CGT liability on that property

naturally the other property would have amassed 3 year's CGT liability whilst it was no longer your home, but you would be unlikely to have any CGT to pay anyway after you have offset letting relief and PRR which you can claim against that one

presumably as a Sparks you are VAT registered? In which case be careful when zero rating the new build costs to not mix them in which your "normal" work

Thanks 00ec25.
That was my thought, but I needed someone else to come up with the same conclusion to convince me that I was on the right track.

ProDave

Re VAT. As a self builder, pay the VAT, keep the receipts, and submit a VAT reclaim when finished. That will keep it separate from your other business.

sparkys2003

ProDave wrote: »

Re VAT. As a self builder, pay the VAT, keep the receipts, and submit a VAT reclaim when finished. That will keep it separate from your other business.

Thanks ProDave, Sorted a VAT claim pack the same time as I filled in numerous forms for the Community Infrastructure Levy relief, which is a complete ball ache!

nubbins

I'm in the same position, bought a property in 2015, gained PP for a 4 bed in the garden just before last Xmas and need to live in it 4 a 3 years otherwise a 42k CIL payment.
Not sure if you have a mortgage on your current property but if you have you will probably need to contact the lender for a valuation as you will be splitting the land and therefore lowering the value of the property. You will also need a solicitor to split the title .

sparkys2003

nubbins wrote: »

I'm in the same position, bought a property in 2015, gained PP for a 4 bed in the garden just before last Xmas and need to live in it 4 a 3 years otherwise a 42k CIL payment.
Not sure if you have a mortgage on your current property but if you have you will probably need to contact the lender for a valuation as you will be splitting the land and therefore lowering the value of the property. You will also need a solicitor to split the title .

I do not have a mortgage, so that should save some extra hassle, but I have a solicitor sorting out title deeds thanks.

I have also been advised to get the new property address registered as soon as possible, as BT will not issue a phone line to an unregistered address, and this can take months to sort out.