Tax question 3 June 2022 at 9:24AM edited 5 June 2022 at 5:19AM in Cutting tax 3 replies 152 views

Black_Cat2

Hi all. 

Hope someone might be able to answer this for me? 🐱

Here's what I understand so far:

It has taken well over a year to finalise my late father's estate.  In this time his property has increased in value meaning CGT will now be payable.  I understand this will be on the difference between the property sale price less the valuation at probate.  Straight forward so far... 

During the process it came to light there was a charge against the property which needed to be removed at Land Registry.  My father had settled the charge but didn't notify Land Registry at the time.  My Solicitor has raised a bill for sorting this but said that they have no idea whether I can include this bill as a deduction when I notify HMRC on the CGT. 

On reading the HMRC website I believe I can deduct estate agent fees and solicitors fees for selling the property but it doesn't make mention of my particular 'charge' situation.   

There is also a bill for 'clearing' the property prior to selling so I'd like to know if I can add this as a deduction as well? 

Might be questions I should put to an Accountant but you guys are always helpful/knowledgeable so I'm stopping by here first.  Any help appreciated! 🐈

Jeremy535897

According to HMRC, you will struggle with both. See:
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15250

The legislation actually says in section 38 TCGA 1992:

(1)Except as otherwise expressly provided, the sums allowable as a deduction from the consideration in the computation of the gain accruing to a person on the disposal of an asset shall be restricted to—

(a)the amount or value of the consideration, in money or money’s worth, given by him or on his behalf wholly and exclusively for the acquisition of the asset, together with the incidental costs to him of the acquisition or, if the asset was not acquired by him, any expenditure wholly and exclusively incurred by him in providing the asset,

(b)the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset, being expenditure reflected in the state or nature of the asset at the time of the disposal, and any expenditure wholly and exclusively incurred by him in establishing, preserving or defending his title to, or to a right over, the asset,

(c)the incidental costs to him of making the disposal.

(2)For the purposes of this section and for the purposes of all other provisions of this Act, the incidental costs to the person making the disposal of the acquisition of the asset or of its disposal shall consist of expenditure wholly and exclusively incurred by him for the purposes of the acquisition or, as the case may be, the disposal, being fees, commission or remuneration paid for the professional services of any surveyor or valuer, or auctioneer, or accountant, or agent or legal adviser and costs of transfer or conveyance (including stamp duty or stamp duty land tax) together—

(a)in the case of the acquisition of an asset, with costs of advertising to find a seller, and

(b)in the case of a disposal, with costs of advertising to find a buyer and costs reasonably incurred in making any valuation or apportionment required for the purposes of the computation of the gain, including in particular expenses reasonably incurred in ascertaining market value where required by this Act."

Black_Cat2

Thanks for the quick response, very helpful 🐈

NorthYorkie

Maybe the cost of removing the charge could be expenditure on "establishing, preserving or defending his title to, or to a right over, the asset,"?