Capital Gains Tax mystery

MoneyMon555

The HMRC official site asks for 'selling price' of an asset (in this case a house), but accountant is adamant it is the market value that needs declaring.
No-where on HMRC site does it ask for market value. 
Does anyone have a clear answer on this please?

ader42

Usually the selling price is the market value.

However, more info. needed, as you can’t realistically sell a house for below market value to avoid CGT, HMRC will know and investigate.

Who is selling the house and to whom? 

Also, trying to do so may mean you get taxed CGT anyway, or even worse end up with an Inheritance Tax problem down the line due to the difference between the sale price and market value deemed part of the estate.

https://www.getagent.co.uk/blog/selling-tips/tax-implications-of-selling-house-below-market-value#

MeteredOut

Are you telling us the full story? eg, was something sold at less than the market value (eg, to a family member) in order to try save CGT?

So long as the selling price was the market value, then the question is moot. If not, then HMRC would want to know why and I can see why the accountant would suggest the market value should be used.

MoneyMon555

Apologies , more context -Not sold at less than market value to avoid the CGT, it was sold to a family member and to get the amount to be agreed for their mortgage provider. ie young couple with children and every mortgage calculator came up with lower value mortgage than market value of house - so to help, it was sold at lower value.

But as I say, the HMRC site when trying to pay that CGT within 30 days  is asking for the 'sale price' , and nowhere does it ask for market value, despite all the advice sites and accountants saying to is market value...

wmb194

MoneyMon555 said:

The HMRC official site asks for 'selling price' of an asset (in this case a house), but accountant is adamant it is the market value that needs declaring.
No-where on HMRC site does it ask for market value. 
Does anyone have a clear answer on this please?

What's the context? Are you trying to sell it below market value for some reason? Not saying this is you but e.g., they might be worrying that you're trying to sell at 'undervalue' in order to avoid an obligation and/or evade tax. Obviously HMRC isn't keen on this either.

https://www.clarkebell.com/blog/what-are-transactions-at-an-undervalue/

EthicsGradient

HMRC notes for capital gains say:

Transferring assets between connected people If you sell, give or receive an asset to or from a connected person you may need to replace the price paid with the market value of the asset when you work out your gain or loss...

Capital Gains Summary notes (publishing.service.gov.uk)
and "family member" may be one of the "connected persons" listed there.

MoneyMon555

EthicsGradient said:

HMRC notes for capital gains say:

Transferring assets between connected people If you sell, give or receive an asset to or from a connected person you may need to replace the price paid with the market value of the asset when you work out your gain or loss...

Capital Gains Summary notes (publishing.service.gov.uk)
and "family member" may be one of the "connected persons" listed there.

Many thanks - that could be the advice I need - reading now, many thanks

MeteredOut

MoneyMon555 said:

Apologies , more context -Not sold at less than market value to avoid the CGT, it was sold to a family member and to get the amount to be agreed for their mortgage provider. ie young couple with children and every mortgage calculator came up with lower value mortgage than market value of house - so to help, it was sold at lower value.

But as I say, the HMRC site when trying to pay that CGT within 30 days  is asking for the 'sale price' , and nowhere does it ask for market value, despite all the advice sites and accountants saying to is market value...

What was the market value and what was it sold for (what an online mortgage calculator produces is meaningless)? If its a few K different, i can't see why there's an issue. If it was, say, £10K plus, it certainly looks like someone was selling it lower to reduce CGT, even if that was not the intent.

EDIT: Just seen EhticsGradients link above - it certainly looks like this is what the accountant is asking for the market value to be used.

MoneyMon555

I have read through the .gov link provided. I think this is the answer, but it does say 'may' rather than 'must'?

"Transferring assets between connected people

If you sell, give or receive an asset to or from a connected person you may need to replace the price paid with the market value of the asset when you work out your gain or loss."

Happy to put in the market value, as in the grand scheme of things we are not talking much £ anyway, but by being very clear in asking for 'sale price' on HMRC declaration of CG , it isn't 100% clear and their phone help line is closed till September now

MoneyMon555

I will just mention though that the sale price was set at the value that the relation could then buy when asking for mortgage, no other reason . They had been renting it for several years before and could pay the rent, and the mortgage isn't that much more - but they were declined on their earnings on the market value, and when a lower sale price was offered, they got a deal

MoneyMon555

Thanks for help all.