CGT under the threshold once split with husband?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    CGT under the threshold once split with husband?

    Hi hoping someone can clarify...

    I'm busy doing 2019-20 return. We sold a BTL during that year for £79500. As it was jointly owned between me and husband do I treat it as selling for £39750 for my part (and his) and therefore below the £48000 amount that you have to report on SA for selling an asset? Thanks.

    #2
    The capital gains after sale of BTL property is calculated from "sale proceeds" minus "acquisition cost" including costs charged by estate agent and conveyancing solicitor costs.

    For example : If the sale proceeds after deducting selling costs , was £78,000 and original purchase was £51,000, then your capital gain is £78K - £51K = £27K.
    Since the property was owned by 2 persons, each person declares 50% in a tax return, showing capital gain = £39,000 - £ 25,500 = £13,500.

    The personal capital gains allowance is £12,000 ( tax free ). So the tax is charged on the taxable gain £1,500 at 18% or 28%.

    Where did you find £48,000 figure ?

    Comment


      #3
      The £48000 figure is mentioned within the SA form. There is the option to submit a CGT form if you've disposed of a chargeable asset and it says something along the lines of if the value is more than £48000 (I'm assuming it equates to 4 x this years allowance) and you've made a gain over the allowance. Property was bought for 56500 and sold for 79500 so a profit of £11500 each once split.

      So if property selling price is split over my SA and husband's SA we're each below the £48k and we've both made less than the allowance so no CGT to pay but still not sure if I have to report it somewhere.

      Hope the above makes sense.

      Comment


        #4
        Why exactly don't you want to declare it? If you are submitting a return anyway.

        Comment


          #5
          I checked the HMRC website and found the £48,000 figure refers to form SA905 for Trusts and Trustees. Tell HMRC about capital gains made by a trust

          "As a trustee, you must tell HMRC either about:
          • disposals the trust makes if they result in a liability in a tax year
          • all disposals the trust makes whether they result in a gain or a loss because the trust has been issued an SA return unless:
            • the value of the disposals exceeds the annual exempt amount by 4 times (£48,000 for the 2019 to 2020 tax year)
            • you’re liable to pay Capital Gains Tax

          You can do this by completing form SA905 Trust and Estate Capital Gains."

          You and your husband have been probably given the wrong form.

          Comment


            #6
            I do want to declare it but it appears the SA form isn't set up to do it/ doesn't need it if the asset is below £48k and no gain over £12k made? Once you tick the boxes to state that you don't get the option of filling in a CGT form. If the asset was in one name we would meet the criteria for declaring ie over £48k and a gain of £23k made. I'm assuming (and this is the part that I'm not sure about) that because the property was jointly owned we each declare half the buying, selling and gain figures so that we can each use our allowance but then this brings us below the threshold for declaring. It comes down to do I half everything in the same way I do with rental income/costs as all jointly owned or declare it as one 'lump' but somehow attach husbands £12k allowance to it?

            On the form it says "If you disposed of chargeable assets worth more than £48,000 choose 'Yes', otherwise, choose 'No'.

            You must fill in the capital gains pages and attach your computations if in the tax year you disposed of chargeable assets which were worth more than £48,000"

            and then

            "If your taxable gains after taper relief are more than £12,000 choose 'Yes', otherwise, choose 'No'.

            You must fill in the capital gains pages and attach your computations if in the tax year no losses are deducted from your chargeable gains but your total chargeable gains after applying taper relief are more than £12,000."



            Comment


              #7
              Send a letter to the tax office ( post by signed delivery ) and give your details for 50% share ( sale proceeds £39,750 and acquisition cost £28,250 ), capital gain = £11.500 which is below the Capital Gains Personal Allowance .

              Am I required to submit any tax return for my 50% share of capital gain ?

              Comment


                #8
                Thanks for the replies. Will get in touch with the tax office. Am I correct in thinking the asset does have to be split across acquisition/sale/gain rather than 1 asset with 2 allowances attached as all SA are done at an individual level rather than as a couple?

                Comment


                  #9
                  I did this for a sale on my last tax return.

                  It is my recollection that you must use the full sale price in each tax return, but you (somehow, I cannot recall) declare the gain as 50% per return.

                  Comment


                    #10
                    I did this last year and you simply divide the figures into the shares owned.
                    So if the total sales value was £79500, your individual sales proceeds were £39750.
                    Same with the costs and purchase price.
                    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


                      #11
                      Thanks for the replies. I'll half everything and also write to the tax office to confirm.

                      Comment


                        #12
                        You have to declare the gain or loss. When you complete the form, there is a box asking if you have disposed of a property and how many properties do you now rent out. The tax man will be looking out for figures.

                        Comment


                          #13
                          *how many properties do you now rent out* I've never had to say how many properties we rent out. The figures from the properties have always just been added and divided by 2 (50% me/50% husband) and then I enter one set into my SA form and one (duplicate) set into my husbands. I'm wondering if the online form, which I've always used, is different to the paper version.

                          Comment


                            #14
                            I think the figure HMRC quote for declaring sales corresponds to the level for filing stamp duty return thus making it easy to spot non declaration, but TBH as you have no CGT to pay anyway it's irrelevant as long as you and hubby do the same thing.
                            If you write a letter you'll just draw attention and you are clearly just trying to do the honest thing.
                            The online form definitely has a box for number of properties let jointly but I think it's described as "optional" so many ignore it !

                            Comment


                              #15
                              Originally posted by Section20z View Post
                              The online form definitely has a box for number of properties let jointly but I think it's described as "optional" so many ignore it !
                              I'm going to have to pay more attention!

                              Comment

                              Latest Activity

                              Collapse

                              • Reply to Tax with 30 days
                                by Stew
                                They clearly don't want your money ...
                                13-08-2020, 23:00 PM
                              • Tax with 30 days
                                by AndrewDod
                                If they want to make laws they need to make sure they have the brains and skills to implement them.

                                So I left reporting CGT until the very last day (today) - as is my right.

                                When I tried to log in to the government gateway it told me I now need extra authentication. I chose...
                                13-08-2020, 16:12 PM
                              • Reply to Capital Gains Tax
                                by Section20z
                                Plus quite likely another 10% saving on the wife's share of the gain (28%-18%)...
                                13-08-2020, 22:29 PM
                              • Capital Gains Tax
                                by Connor0431
                                Hi all,

                                Small query

                                I’m looking to sell my rental property in the next few months however I wanted to understand CGT tax.

                                I have recently got married in the past month and as part of this would I be able to take into account married couple allowance for CGT?...
                                13-08-2020, 11:39 AM
                              • Reply to Capital Gains Tax
                                by Kape65
                                I believe transfers between spouses are a perfectly legal and allowed method of reducing tax.
                                13-08-2020, 20:32 PM
                              • Reply to First year tax for a newbie landlord
                                by jpucng62
                                Basically anything that is done in order to (and exclusively for) renting out the property is allowable. Receipts are not necessary (although desirable) - proof of the payment should be fine. Sort you proofs now & keep them in case you are challenged (very unlikely!). Remember you must declared...
                                13-08-2020, 19:54 PM
                              • First year tax for a newbie landlord
                                by rag-uk
                                Hi all, I'm new to the forums as I'm a new "accidental" landlord so was wondering if somebody could advise on allowable expenses prior to my first tenants moving in. I've tried searching the net but seem to get lots of conflicting info in this "grey area".

                                Basically,...
                                13-08-2020, 16:13 PM
                              • Reply to Capital Gains Tax
                                by jpucng62
                                I was told by a solicitor that if HMRC believes you have altered ownership to evade tax they can ignore the gift and tax you on it all anyway.

                                Remember that the extra CGT is 18% or 28% of £12.300 (£2214 or £3444) - sometimes you just have to accept that there is tax to pay. ...
                                13-08-2020, 19:48 PM
                              • Reply to Tax with 30 days
                                by Kape65
                                Well you're screwed now, might as well leave it another few months and try again
                                13-08-2020, 18:21 PM
                              • Reply to Capital Gains Tax
                                by Kape65
                                And don't forget the SDLT that may be payable on the transfer, especially painful if she already owns a share in another property such as the matrimonial home.
                                13-08-2020, 18:16 PM
                              Working...
                              X