Capital Gains Tax, First home became rental, now sold

CarpeJugulum

Hi,
Could anyone offer any advice on capital Gains Tax?

We bought our first house in 1999,  it needed a lot of work to make it a home.
Old Rotten wood single glazing replaced with UPVC
Rotten Conservatory removed
Bathroom floor and Joists needed replacing, along with bathroom
No handrail on stairs
New Boiler
cavity wall insulation
Kitchen replaced (was just a freestanding cooker and a couple of freestanding cupboards
internal brick wall was knocked through with no RSJ so needed making safe
Fencing replaced
carpets replaced

I did most of the work I could myself, we never intended to become landlords so i didnt keep any receipts/invoices, a lot of it was just materials.
I have an idea on the costs of each project from memory, but not accurately

We moved home in 2012,  but couldn't sell our old house so took the option of renting, we sold the house end April 2025.

Im now completing the CGT, and see the section for "Improvements" can i use my estimates or must they be backed up with invoices?  same with Costs of purchase, I don't remember this from the time, it wasn't extravagant just a bank survey and solicitors fees.

Thanks for any advice

Bookworm225

CarpeJugulum said:

Hi,
Could anyone offer any advice on capital Gains Tax?

We bought our first house in 1999,  it needed a lot of work to make it a home.
Old Rotten wood single glazing replaced with UPVC
Rotten Conservatory removed
Bathroom floor and Joists needed replacing, along with bathroom
No handrail on stairs
New Boiler
cavity wall insulation
Kitchen replaced (was just a freestanding cooker and a couple of freestanding cupboards
internal brick wall was knocked through with no RSJ so needed making safe
Fencing replaced
carpets replaced

I did most of the work I could myself, we never intended to become landlords so i didnt keep any receipts/invoices, a lot of it was just materials.
I have an idea on the costs of each project from memory, but not accurately

We moved home in 2012,  but couldn't sell our old house so took the option of renting, we sold the house end April 2025.

Im now completing the CGT, and see the section for "Improvements" can i use my estimates or must they be backed up with invoices?  same with Costs of purchase, I don't remember this from the time, it wasn't extravagant just a bank survey and solicitors fees.

Thanks for any advice

read the section on use of estimates
CG-APP18-250 - “Report and pay the tax” section of the return submitted through the CGT on UK Property Account: Enter losses and exemptions - HMRC internal manual - GOV.UK

many of the items in your last are not capital costs anyway, they are repairs which have nothing to do with your CGT when selling (in reality you could have claimed many of them against the rental income, but too late now)

Old Rotten wood single glazing replaced with UPVC - replacement of single with double glazing is expressly not capital; 
BIM46925 - Specific deductions: repairs and renewals: what is a repair: changing technology - HMRC internal manual - GOV.UK

Rotten Conservatory removed - disallowed 
CG15200 - Expenditure: enhancement expenditure: demolition costs - HMRC internal manual - GOV.UK For example, if a building is erected in a garden and is subsequently removed and the garden reinstated, neither the cost of the building nor of its removal will normally be allowable. 


the rest of the list are all repairs not capital improvements 
Bathroom floor and Joists needed replacing, along with bathroom t
No handrail on stairs
New Boiler
cavity wall insulation
Kitchen replaced (was just a freestanding cooker and a couple of freestanding cupboards
internal brick wall was knocked through with no RSJ so needed making safe
Fencing replaced
carpets replaced

saajan_12

Its largely moot anyway, as those items are just maintenance and replacing existing things rather than capital additions and hence not deductible.  They're expected to have a short / mid term lifespan and would naturally need updating every x years, but that doesn't make it an improvement for CGT purposes. 

At most perhaps the removal of the internal wall, but that's more likely just for your preferred layout rather than adding value. 

CarpeJugulum

Bookworm225 said:

CarpeJugulum said:

Hi,
Could anyone offer any advice on capital Gains Tax?

We bought our first house in 1999,  it needed a lot of work to make it a home.
Old Rotten wood single glazing replaced with UPVC
Rotten Conservatory removed
Bathroom floor and Joists needed replacing, along with bathroom
No handrail on stairs
New Boiler
cavity wall insulation
Kitchen replaced (was just a freestanding cooker and a couple of freestanding cupboards
internal brick wall was knocked through with no RSJ so needed making safe
Fencing replaced
carpets replaced

I did most of the work I could myself, we never intended to become landlords so i didnt keep any receipts/invoices, a lot of it was just materials.
I have an idea on the costs of each project from memory, but not accurately

We moved home in 2012,  but couldn't sell our old house so took the option of renting, we sold the house end April 2025.

Im now completing the CGT, and see the section for "Improvements" can i use my estimates or must they be backed up with invoices?  same with Costs of purchase, I don't remember this from the time, it wasn't extravagant just a bank survey and solicitors fees.

Thanks for any advice

read the section on use of estimates


many of the items in your last are not capital costs anyway, they are repairs which have nothing to do with your CGT when selling (in reality you could have claimed many of them against the rental income, but too late now)

Old Rotten wood single glazing replaced with UPVC - replacement of single with double glazing is expressly not capital; 


Rotten Conservatory removed - disallowed 
For example, if a building is erected in a garden and is subsequently removed and the garden reinstated, neither the cost of the building nor of its removal will normally be allowable. 


the rest of the list are all repairs not capital improvements 
Bathroom floor and Joists needed replacing, along with bathroom t
No handrail on stairs
New Boiler
cavity wall insulation
Kitchen replaced (was just a freestanding cooker and a couple of freestanding cupboards
internal brick wall was knocked through with no RSJ so needed making safe
Fencing replaced
carpets replaced

Thank you for the reply,
We bought the house knowing it needed the work doing to it, had the house been in good condition then it would have been significantly more expensive when we bought it (Paid £42k, similar houses in the same area in good condition were circa £50k).
All the improvements were done as homeowners, before we let the property, so couldn't have been claimed against rental income (as far as I understand)

I was unsure as to the kitchen and bathroom as the .gov CGT calculator example states

"Replacing a basic kitchen or bathroom with a luxury version is normally considered an improvement.
But replacing them with something of a similar standard is normally not an improvement."
Whilst the new taps were not solid gold, they were a significant improvement on what was there at the time of purchase.

Ill probably err on the side of caution when completing my CGT

silvercar

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

Bookworm225

silvercar said:

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

as previously stated, no it is revenue not capital
BIM46911 - Specific deductions: repairs and renewals: what is a repair: the ‘entirety’: examples - HMRC internal manual - GOV.UK

CarpeJugulum

silvercar said:

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

Thats what i thought, based on the example from the .gov CGT calculator example which states
 
"Replacing a basic kitchen or bathroom with a luxury version is normally considered an improvement.
But replacing them with something of a similar standard is normally not an improvement."

The new kitchen and bathroom were significant improvements over the existing ones on purchase of the house.

Bookworm225

CarpeJugulum said:

silvercar said:

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

Thats what i thought, based on the example from the .gov CGT calculator example which states
 
"Replacing a basic kitchen or bathroom with a luxury version is normally considered an improvement.
But replacing them with something of a similar standard is normally not an improvement."

The new kitchen and bathroom were significant improvements over the existing ones on purchase of the house.

it is your responsibility to self assess your own tax position. If you read the guidance one way and decide that fits your desire to claim then go ahead and claim it. It only becomes an issue if you are selected for a random check (or the computer says no to your figures)  at which point the law will be applied as HMRC see it, not as you see it.

so what to do? Take professional advice from a CGT accountant (not all are) or wing it on your own. The first may be there to help with a tax enquiry if it arises, or you can decide you won't be investigated so you won't worry about what you claim.

you started with a kitchen, you ended with a kitchen. As per previous link the "entirety" was not changed.
"luxury" is a purely subjective assessment based on ? How much did the kitchen cost?  Would an "ordinary" person class yours yours as "luxury" or merely a "modern fitted" kitchen (advance of technology)

Hugely expensive stone counter tops? Built in gadgets? Hugely expensive tiling? Very different electrics?

silvercar

Bookworm225 said:

silvercar said:

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

as previously stated, no it is revenue not capital
BIM46911 - Specific deductions: repairs and renewals: what is a repair: the ‘entirety’: examples - HMRC internal manual - GOV.UK

From your link:, “ All the existing base units, wall units and sink etc, are stripped out and replaced, as is the fitted cooker and hob. New units of an equivalent quality are installed but in a different layout to allow for the re-location of the boiler, finally the kitchen is re-plastered and re-tiled.”

Here there are no base units or wall units as the previous kitchen was not fitted. So I would consider the first fitted kitchen in the property to be an improvement.

Bookworm225

silvercar said:

Bookworm225 said:

silvercar said:

Installing a fitted kitchen, when there wasn’t one previously, sounds like an improvement to me.

as previously stated, no it is revenue not capital
BIM46911 - Specific deductions: repairs and renewals: what is a repair: the ‘entirety’: examples - HMRC internal manual - GOV.UK

From your link:, “ All the existing base units, wall units and sink etc, are stripped out and replaced, as is the fitted cooker and hob. New units of an equivalent quality are installed but in a different layout to allow for the re-location of the boiler, finally the kitchen is re-plastered and re-tiled.”

Here there are no base units or wall units as the previous kitchen was not fitted. So I would consider the first fitted kitchen in the property to be an improvement.

as I said, you can claim what you want, just make sure you know what legislation you are relying on to support your stance.

you might want to revisit the "entirety" concept as the next para after your quote sums it up:
The entirety is the house, not the fitted kitchen. The new kitchen is slightly different but it does the same job as before. Sophia has simply replaced the old kitchen with a modern equivalent. This is a repair and allowable expenditure.

BIM46910 - Specific deductions: repairs and renewals: what is a repair: the ‘entirety’ - HMRC internal manual - GOV.UK

as with double glazing. we all accept that a (first) fitted kitchen is an expectation ("improvement") in a modern house, but HMRC don't see it that way as they regard it as simply advance of current technological standards, not an inherent "not there before so must be a capital addition" but that said, the final decision will be subjective and depend on the attitude of the HMRC person (ie how much tax can they gather set against how much will it cost them to investigate) 

BIM46920 - Specific deductions: repairs and renewals: what is a repair: different materials - HMRC internal manual - GOV.UK

The position is that:

• the work is a repair and not an improvement if after the work is carried out, the asset can just do the same job as before;
• the work is an improvement and therefore disallowable as capital expenditure if, as a result of the work, more can be done with the asset, or the asset can be used to do something that it could not do before

the house had a kitchen, it still does (and kitchens are expressly not defined as integral features as those are always capital) 
BIM46950 - Specific deductions: repairs and renewals: the character of the asset - HMRC internal manual - GOV.UK