Advice for a total novice re CGT on sale of a house please.

Ponsienella2

Jeremy535897 said:

I agree. Start from this viewpoint (for each of you). Only claim for what you reasonably believe to be enhancement expenditure that is reflected in the value of the asset when sold. Read the reference in the Inland Revenue manual referred to earlier.

Ask a local estate agent to provide values at the relevant dates in writing for you to use in your computation. You should be charged a relatively modest amount. Failing that, if there are values at similar times for similar properties in the same road, use those, adjusted as appropriate for any differences to your property (including condition). Print off the valuations and keep them. Put in a 10% discount for the fact that each owner owns only part of the property where a part valuation is appropriate. Use the £100,000 value where relevant as you have no better guide than that.

Explain what you have done in the white space on the returns, and expect to be one of the vast majority whose return will never be looked at. HMRC are already completely overwhelmed, and the millions of extra taxpayers filing self assessment returns as a result of the Autumn statement will mean they have no time to look at anything! (With apologies to @jimmo )

If I am wrong, the worst you should face is a bit of interest if HMRC successfully argue that more tax should have been paid.

Thanks. You are probably right.

Ponsienella2

[Deleted User] said

In my experience HMRC appointed an independent valuer to make the valuations on their behalf - a local estate agent! This is no different from what you should be doing to obtain those same valuations. You are probably starting to overthink this!

Thanks for the response.  I probably am overthinking it.

Ponsienella2

I have just thought of another question. 

If the completion date is in December, do we calculate my husband's income based on his earnings up to the completion date in order to determine whether he pays CGT at 18% or 28% or is it based on his earnings for the whole tax year?

If so, and his income to completion date was, say, £45K, would he pay the first £5,270 at 18% and thereafter at 28%?

eskbanker

Ponsienella2 said:

If the completion date is in December, do we calculate my husband's income based on his earnings up to the completion date in order to determine whether he pays CGT at 18% or 28% or is it based on his earnings for the whole tax year?

I believe the latter, otherwise high earners could always secure a distorted CGT benefit simply by disposing of assets early in the tax year.

[Deleted User]

Ponsienella2 said:

I have just thought of another question. 

If the completion date is in December, do we calculate my husband's income based on his earnings up to the completion date in order to determine whether he pays CGT at 18% or 28% or is it based on his earnings for the whole tax year?

If so, and his income to completion date was, say, £45K, would he pay the first £5,270 at 18% and thereafter at 28%?

The capital gain falls into 2022/23 tax year and the amount payable is dependent on his TAXABLE income for that tax year. If his other taxable income for the WHOLE of 2022/23 is £45000 your calculation  is correct.