Capital Gains Tax and PETs

brantwood150

telly-addict wrote:

If an asset is owned at March 82, you actually need to do two computations - one with cost and one with March 82 value. The indexation is calculated on the higher of cost and MArch 82 value for each computation. You then use the gain which is lower. You must remember to exclude from the MArch 82 calculation any enhancement expenditure which would be reflected in the value at 31 March 82. You would need to contact a Chartered Surveyor to get a valuation - the Inland Revenue will liaise with the District Valuers Office regarding the value. Obviously you will want it as high as possible, they as low.....

Definitely seeking a quote from a local Chartered Accountant or Chartered Tax Adviser to help you with this - especially if negotiations are needed re a valuation.

I don't disagree with anything you say, but if you have a 1980 probate value for the property (i.e. very close to March 1982), in my experience, the Inland Revenue will often accept a value based on the 1980 value as adjusted for movements in the house price index between probate date and March 1982. I've even had agreement based on movement in RPI over the period.

You might want to try asking the Inspector if he would agree to use this method before going for a formal March 1982 valuation.

Elaine_Wilson

Just one point about the calculation of the tax due. In your post you used the example of £73,500 x 0.2 = £14,700. This does not properly apply the rates mentioned by nlpnlp.

The 20% would be used for the part of the gain between your father's taxable income without the capital gain (pension plus rental income less personal allowance) and the limit of the basic rate band (now £32,400 or thereabouts from memory). The rest of the gain would be taxed at 40%.