Confused about tax situation when selling BTL property: SA and CGT

7sefton

Hi everyone

I've rented out a flat for the last couple of years and am now about to sell it. I need a little help getting my income tax (self-assessment) and CGT straight in my head.

The timeline has been:

Jan '22: Tenants left, stopped receiving rent. Flat empty since then, but costs have continued (e.g. BTL mortgage, energy bills).
Feb '22: Minor redecorations while deciding whether to re-let or sell
March '22: Decide to sell, list with agent, offer accepted
July '22: Completion

I have a few questions:

1. For income tax (self assessment), can I deduct all the expenses (e.g. energy bills, journeys to flat, paint to redecorate) from my rental profits up to the end of 21/22 tax year? Even though I had no tenants/rental income since January and decided to sell in March?

2. Can I claim back the tax on similar expenses in my self assessment for the new 22/23 tax year, even though I have had no tenants/rental income?

3. If not, can I offset my expenses since 5 April 2022 from any CGT liability from selling the flat? (I know I can deduct certain costs like agent fees etc, but I'm asking about more day-to-day expenses like travel to the property to sort it out prior to selling, telephone calls, meals, etc.)

Thanks for any help!

Jeremy535897

If the flat is your sole rental property, your rental business ceased when the last tenant's lease ended. You can only claim certain post cessation expenses. See:
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim3000

Costs of sale can be deducted from the capital gain, but only those in section 38(2) TCGA 1992:

"(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) 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."