Any way to reduce tax liability before CGT hit!

pphillips

Cruixer wrote: »

I've added in costs for the purchase and sale, like solicitors fees etc.



Are there other reliefs I should be adding in?

CGT only applies to the amount the property has increased in value. From this you can deduct the costs of purchase and sale, costs of improvements to the property, your CGT annual allowance and private residence relief for any period you lived there.

Cruixer

Thanks pphillips. I think I have included all of the allowed deductions.



The gain was £71k, minus purchase and sale costs of around £6k, minus the CGT allowance of £11.7k, gives me a taxable gain of £53.3k, and at 28% a bill of £14.9k. I didn't have any capital costs or officially live there at any point.



Considering that there is an annual allowance of £11.7k, I bought the flat in 2004, and I have never had a capital gain in my life before, I don't suppose there is any way I can spread this allowance in from previous years?

00ec25

Cruixer wrote: »

Hi all,
In April 2018 I sold my old flat which had been rented out for a number of years so will be due a hefty thump for CGT at the end of this tax year. I am just above the higher tax bracket

Cruixer wrote: »

Thanks pphillips. I think I have included all of the allowed deductions.

The gain was £71k, minus purchase and sale costs of around £6k, minus the CGT allowance of £11.7k, gives me a taxable gain of £53.3k, and at 28% a bill of £14.9k. I didn't have any capital costs or officially live there at any point.

Considering that there is an annual allowance of £11.7k, I bought the flat in 2004, and I have never had a capital gain in my life before, I don't suppose there is any way I can spread this allowance in from previous years?

I thought you may be missing the elephant in the room with your focus on reducing your income

did you EVER live in "my old flat" as your main residence?

if the answer is yes, then your assumptions are way off as to how much CGT you face as it will be much lower, and such relief will be worth a lot more than faffing around with pensions

Cruixer

Thanks 00ec25. I was never 'resident' in the flat. I bought while working overseas, with the intention of moving into it once I could get a job and move back home. I had a few overnights there in between lets, but from purchase in 2004 to my return in 2009 I was resident in another country. By the time I actually returned in 2009 I was getting married and made a joint purpose of a house and the flat remained let until 2018.


I suppose the thing that feels a little odd about the system is that over the 14 years I owned the flat I have had ~£140k of unused CGT allowances, but because the sale falls in one year I have to pay tax on a gain that is less than that!


I won't complain too much, the plus side on paying tax is that it means you have a gain in the first place!

pphillips

Cruixer wrote: »

Considering that there is an annual allowance of £11.7k, I bought the flat in 2004, and I have never had a capital gain in my life before, I don't suppose there is any way I can spread this allowance in from previous years?

You can carry forward capital losses from previous tax years but not your unused allowances.

00ec25

Cruixer wrote: »

I suppose the thing that feels a little odd about the system is that over the 14 years I owned the flat I have had ~£140k of unused CGT allowances, but because the sale falls in one year I have to pay tax on a gain that is less than that!

CGT rate was reduced from 40% to 28/18% when they removed the indexation allowance that previously would have addressed the inflationary increases you moan about

Cruixer wrote: »

I won't complain too much, the plus side on paying tax is that it means you have a gain in the first place!

that is a very wise stance to take