CGT - property

EightFiveTwoDude

Hi all,
I’m looking for some advice on Capital Gains Tax (CGT) as I’m getting conflicting information online and want to make sure I get this right.

I bought my house in 2019 for £84,000 on a shared ownership (50/50) basis and sold it in 2024 for £145,000.

During ownership I spent around £18,000 on improvements: new kitchen, new bathroom, new flooring, full central heating system, complete electrical rewire, and full re-plastering/re-boarding.

Selling costs (estate agent fees, survey, and solicitor fees) came to £4,500.

I lived in the property for 54 months out of the total 70 months I owned it.

When I entered all the figures into the Government Gateway / HMRC tool, it calculated my CGT liability as £0. However, several online CGT calculators are showing a tax bill of £300–£500.

My main questions are:
• Based on these numbers, do I actually need to pay any CGT?
• If HMRC disagrees with my figures later, do they normally work it out with you first, or do they immediately apply penalties?
Any guidance or experience from people

who’ve been through this would be really appreciated. Thank you!

_Penny_Dreadful

https://forums.moneysavingexpert.com/discussion/6665999/cgt-property

You purchased your share for £84,000 an sold for £145,000 making your gain £61,000.

Most of what you're calling home improvements sound like revenue expenditure rather than capital expenditure and therefore can't be used to reduce your capital gain liability. For example, when you installed the 'full central heating system' was there an existing central heating system and what was materially different between the existing one and the new one?

The selling costs are an allowable expense although why did you pay for the survey? Is the property in Scotland?

Including selling costs takes your gain down to £56,500.

You get relief for the 54 months it was your PPR plus an additional 9 months.

PPR relief = £56,500 x (54 + 9) / 70 = £50,850

In the 2024/25 tax year you received a £3,000 GCT allowance.

Net gain = £61,000 - £4,500 - £50,850 - £3,000 = £2,650

Depending on your income for the 2024/25 tax year you'll pay CGT at 18%, 24% or a combination of the two.

As you must report your CGT within 60 days of the sale and we're way past that now, HMRC can charge you interest and penalties.

CGT is a self-assessed tax. HMRC doesn't agree or validate the figures with you, that responsibility sits entirely with the tax payer to ensure that only allowable expenditure and reliefs are claimed. If HMRC later reviews the return and disagrees or is suspicious about any element of the calculation, for example, if amounts claimed as capital expenditure do not meet the statutory definition, they can open a tax enquiry with additional tax, interest and penalties becoming payable.

mta999

Excellent explanation above - very clear

Would echo that you need to double check what is allowable as capital expenditure - for example a new kitchen might be if it was a significant upgrade and not just replacement of the old one

Re-wiring and replastering probably would count as repairs and not be allowable

Ditto flooring - depending on how much of an improvement the new flooring was. For example if you replace lino with Italian marble it probably would be ok. If you replace lino with wood flooring probably not.

There are various examples online so search