Capital gains on two concurrent property developments

Bongolia

I bought two flats in the same building in 2019. The first flat took over a year to complete and sell but, since all of the structural work was done by that point, the second flat will be finished much faster. The first flat sold in Aug 2021 and I expect the second to be easily completed no later than December 2021. Is there any reason not to declare both projects in the same tax return? Much of the early structural expenditure is shared between both properties but I expect the gain to average around 20k for flat1 and 30k for flat2. Neither of them are my principle private residence. I'm an unmarried basic rate tax payer.

Jeremy535897

If these sales are capital gains tax matters, the date you exchange contracts on the flats is normally the date they are treated as disposed of. As they are residential properties, the gains would need to be reported within 30 days of the sales completing. See:
https://www.gov.uk/capital-gains-tax/report-and-pay-capital-gains-tax

It may well be, if you bought the properties with a view to selling them at a profit, that you are actually trading, and therefore any profits would be subject to income tax. If this is the case, you should have registered as self employed a long time ago and filed results for at least 2019/20 by now, and possibly 2018/19, depending on when you bought the properties.

Bongolia

Thanks Jeremy. This is potentially a bit of a pickle by the sound of it. The first flat exchanged 2 weeks ago. I asked  my accountant at the beginning of this how I should proceed and I'm fairly sure he advised me to declare it all at the end. I'd better get in touch with him asap!

Jeremy535897

Bongolia said:

Thanks Jeremy. This is potentially a bit of a pickle by the sound of it. The first flat exchanged 2 weeks ago. I asked  my accountant at the beginning of this how I should proceed and I'm fairly sure he advised me to declare it all at the end. I'd better get in touch with him asap!

You should definitely do that. Back in 2019, if the flats are a capital gains tax matter (and as I said, this may not be the case), you could just declare the capital gains on your self assessment tax return for the year in which contracts are exchanged. This changed for disposals of residential property from 6 April 2020 as per my previous link.

You might also raise with him the issue of the anti-avoidance legislation in Part 9A ITA 2007. See https://www.legislation.gov.uk/ukpga/2007/3/part/9A