CGT Online Tax Return Question

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    CGT Online Tax Return Question

    I have a couple of questions relating to my online self-assessment for the CGT calculation on a rental property i have sold.

    I originally lived in the property as my primary residence and had some improvement works done which added to the value of the property. I will be deducting these costs from the gain but i have 2 questions relating to this:

    1/ When i provide HMRC with my calculations, do I have to provide an itemised breakdown of the work carried out or can i just provide the total cost? Include in the Capital Gains Summary Notes there are Computation Working Sheets and they only have one box called 'Improvement Costs' whereas the online self-assessment is asking me to upload a pdf document showing my calculations. If i use this sheet and scan it in will it be sufficient or will HMRC come back asking for a breakdown?

    2/ The works were carried out 17 years ago and I no longer have the receipts. Will HMRC allow me to deduct the costs without me providing receipts? All i can find on this is a guideline that receipts must be kept for claims going back 5 years - For additional info, the property was bought in a dilapidated condition below market value to reflect that work needed to be done to make it habitable again (which can be proved by comparing the purchase price of my property compared to the purchase price of other similar properties in the same location) so all of the works carried out were to bring the property back to a habitable condition which in turn brought the property value back up to market price.

    #2
    The capital gain is reported in Tax Return SA108 + SA108 Notes ( 2019) . There is a blank space in box 54 to show your calculations including your expenses.

    I don't think the tax office can insist on seeing the receipts because 17 years is a long time ago and officially they only require receipts kept for 6 years.

    Comment


      #3
      I'd suggest you need sufficient detail to explain the figure that you are quoting.

      Also, even if you don't have prices, I'd imagine that level of improvement would generate building control documentation, that you should have kept.

      I don't know how much time they spend checking and have only done quoted securities CGT forms, but I imagine they will want to convince themselves that you have correctly understood what is allowable, and have some reasonable basis for the figures you are using. I don't really see how you can come up with accurate figures if you don't have record, and if you guess, you need to tick the box saying that figures are estimated.

      Comment


        #4
        Hi, thanks both for taking the time to respond. No building control was required and any relevant compliance certificates for the work carried out i passed on to the new owner at the point of sale as the certificates belong to the property not me. I do keep records for everything and i know exactly how much i spent on renovations in total as i have a spreadsheet with it on and i know exactly the work carried out as i have another spreadsheet with that on. What i no longer have is the paperwork from the builder which had an itemised breakdown of each individual element of the project and the apportioned costs. So i can say the work cost me £25k and here is a list of the work carried out but i can't itemise it so i can't say out of the £25k the kitchen cost x and the bathroom cost y, etc.

        My questions were: does it matter if i cannot provide an itemised breakdown and does it matter if i no longer have the paperwork from the builder for work done 17 years ago?

        I'm guessing that i may need to call HMRC for advice.

        Comment


          #5
          Please don't take tax advice from the organisation dedicated to maximising the amount of tax that you pay.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            I have a similar problem. One of my buildings was destroyed by a fire 29 years ago and was rebuilt fortunately, funded by my Insurance Company. As it was an Agricultural Building it did not need either planning permission or building control involvement.

            I need to work out the "Enhancement" Costs for my CGT.

            I was advised to ask a Chartered Quantity Surveyor to work out what it would cost today to build and by using the Chartered Surveyors costings a figure of what it would have cost in 1991.

            Perhaps this is a way forward for you. It cost me £400 for my report which included 5 other buildings.

            Fortunately I had photographs of all the buildings before they were replaced and could work out how many bricks, timber roof tiles, concrete etc

            Hope my suggestion helps.

            (although I have yet to find a CGT Specialist to submit it for me)

            Comment


              #7
              Originally posted by Gordon999 View Post
              The capital gain is reported in Tax Return SA108 + SA108 Notes ( 2019) . There is a blank space in box 54 to show your calculations including your expenses.
              May I ask ? In the SA108 Notes (2019) it says "Computation Working Sheet for Straightforward Calculations"

              What do you do if none of the Calculations are straightforward ? I have sold a site with 6 different building on it all built between 1985 and 2001. And unfortunately I have no receipts for the cost of building/repair.

              Comment


                #8
                You have to be able to show how you ended up with the figure you're reporting somehow, even if you haven't got receipts.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  For calculation of capital gain after sale, the gain (= "sale proceeds" minus "acquisition costs" ) and you want to include the cost of 6 additional buildings and not kept the receipts, you still show the calculation in the tax return but you declare the acquisition cost is based on "bookkeeping records and original receipts not kept " or your figure for 6 buildings was estimated by a RICS Chartered Surveyor. etc.

                  Comment


                    #10
                    I had experience of this approx 12 years ago. I bought a house in 1996 when house prices were depressed at their lowest. I lived in in for 9 years, during which time we improved the house and built 2 extensions. (just to give you an idea, it had no kitchen when we bought it). House prices during those 9 years increased dramatically.

                    We moved out and rented the house for a year. When the tenants left we had to make a decision whether to sell the house or carry on renting it because the mortgage rates had increased.

                    I spoke to our tax office and I was told that if I sold within 3 years of my first let I would not pay CGT. However I was informed that if I went over the 3 years I would pay tax on the gain based on the purchase price (9 years prior to letting) and the sale price. I was told I could deduct capital costs but I did not have any receipts. The tax office advisor informed me that without receipts I could not claim the costs.

                    As my purchase price was 50k and the sales value 250k I was not going to give the tax man any of that gain so I sold immediately.

                    This was only my experience and I do not know current rules.

                    Comment


                      #11
                      Originally posted by slooky View Post
                      I spoke to our tax office and I was told that if I sold within 3 years of my first let I would not pay CGT. However I was informed that if I went over the 3 years I would pay tax on the gain based on the purchase price (9 years prior to letting) and the sale price. I was told I could deduct capital costs but I did not have any receipts. The tax office advisor informed me that without receipts I could not claim the costs.
                      Another entry in my long list of "reasons not to take tax advice from the organisation whose purpose is to collect as much tax as possible".
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment

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