CGT on disposal of second property

PaulCooper

We (husband & wife) will sell a property in England shortly, the gain, after using our CGT allowance will be approx £50k. 
Property (when sold) will be owned 50/50, therefore we will both make a gain of £25k over our CGT allowance.
Can one of you out there please guide me how to calculate my CGT
I will earn around £10k this year------------- is it as simple as adding the 10k to the 25k & looking at 35k as if it were all earned income? therefore the CGT payable will be approx 20% of £25k------------ I'll bet it not that simple
Thanks
Paul 

Jeremy535897

See https://www.gov.uk/capital-gains-tax/rates
Also https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

PaulCooper

Thanks Jeremy535897, just to clarify a Buy to Let qualifies as a residential property & not another asset?
Thanks
Paul

Jeremy535897

If it is a residential property you are letting, yes.

oldbikebloke

PaulCooper said:

We (husband & wife) will sell a property in England shortly, the gain, after using our CGT allowance will be approx £50k. 
Property (when sold) will be owned 50/50, therefore we will both make a gain of £25k over our CGT allowance.
Can one of you out there please guide me how to calculate my CGT
I will earn around £10k this year------------- is it as simple as adding the 10k to the 25k & looking at 35k as if it were all earned income? therefore the CGT payable will be approx 20% of £25k------------ I'll bet it not that simple
Thanks
Paul 

in your other post you confirmed joint ownership and stated the split would be 25k each after respective CGT allowance offset 

YOU
total income for CGT 10 + 25 = 35k
basic rate tax threshold 20/21 = 37,500
therefore, for CGT purposes you remain a basic rate taxpayer, so net gain is taxed all @ 18% 
25,000 @ 18% = £4,500 CGT to pay 

WIFE
no income info provided for her, so cannot work out her CGT payable  

Jeremy535897

Presumably the personal allowance would be available to reduce the £10,000 to zero, or is that after personal allowance?

PaulCooper

Hi Guys
Again thanks for the comments, £10k is before personal allowance
Paul

oldbikebloke

Jeremy535897 said:

Presumably the personal allowance would be available to reduce the £10,000 to zero, 

as you well know, yes it would, but it makes no difference with his made up numbers so I left that bit out 

the full answer would be:
total taxable income for CGT purposes
a) gross income subject to income tax 10,000 less income tax personal allowance 12,500 = 0
plus
b) share (stated to be 50%) of gross capital gain 37,300 less CGT exempt amount 12,300 = 25,000

taxable total income 0 + 25,000 = 25,000
basic rate (income) tax threshold 20/21 = 37,500
25,000 - 37,500 = negative number, therefore, for CGT purposes, you remain a lower rate CGT taxpayer, so all of the net gain is taxed @ 18% 
25,000 @ 18% = £4,500 CGT to pay 

what you cannot do is create a negative in section a) since that would mean the income tax personal allowance was used to offset a capital gain, which of course is not allowed for obvious reasons

Jeremy535897

oldbikebloke said:

Jeremy535897 said:

Presumably the personal allowance would be available to reduce the £10,000 to zero, 

as you well know, yes it would, but it makes no difference with his made up numbers so I left that bit out 

the full answer would be:
total taxable income for CGT purposes
a) gross income subject to income tax 10,000 less income tax personal allowance 12,500 = 0
plus
b) share (stated to be 50%) of gross capital gain 37,300 less CGT exempt amount 12,300 = 25,000

taxable total income 0 + 25,000 = 25,000
basic rate (income) tax threshold 20/21 = 37,500
25,000 - 37,500 = negative number, therefore, for CGT purposes, you remain a lower rate CGT taxpayer, so all of the net gain is taxed @ 18% 
25,000 @ 18% = £4,500 CGT to pay 

what you cannot do is create a negative in section a) since that would mean the income tax personal allowance was used to offset a capital gain, which of course is not allowed for obvious reasons

Indeed. I wasn't trying to be picky. OP estimated income at £10,000. It's only half way through the tax year, and if that estimate was wrong by over £2,500 (not knowing the details I cannot speculate how likely that is), the point could be relevant (or, as I pointed out, if OP gave us the figure after the personal allowance was already deducted).

PaulCooper

Hi Both
I've got the plot and really appreciate both of you sharing your expertise
Many thanks
Paul 

PaulCooper

Question, I think I know the answer to, but for clarification. Above has now become a reality and I realise I have to report & pay it within 30 days. Both myself & wife will earn less than the £12500 income tax allowance this year. Assume I earn £10k this year, does this mean a negative figure of £2.5k (10 - 12.5) is taken off my CGT liability? e.g. if after CGT allowance I'm due to pay CGT on £6k, does the negative figure of £2.5k mean I pay 18% on £3.5k (6 - 2.5) or 18% on the £6k?
Thanks--- looked on all the HMRC stuff & couldn't explicitly find the answer
Paul