Capital Gains Tax - do I need an accountant?

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    Capital Gains Tax - do I need an accountant?

    Hi, i’m wondering whether it’s necessary to use an accountant to calculate CGT and submit it on HMRC website. I’m aware of the CGT rate and allowance, so can easily figure out the capital gains. I have also kept a list of the financial costs, conveyancing and other costs related to purchasing the property and have deducted them from the gain. Doesn’t sound that difficult but I am wondering whether an accountant would know a few tricks to lower my CGT liability. I know people transfer a property to a spouse who might be in a lower tax band before selling it. I can’t use that trick as I’m single. Are there other tricks to lower CGT? 🙏

    #2
    There's not much you can do as a single person to reduce CGT.
    And, no you don't need an accountant.
    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


      #3
      Especially if you have never lived there as your genuine PPR, it is completely straightforward. Don't claim things you are not allowed - not worth the risk (so ask here about items of which you are uncertain).

      If you have stocks and shares you could consider selling only losing shares in the same tax year (but if later the allowances reduces and the rates increase you could be storing up more tax in the future than you save depending on your circumstances).

      Comment


        #4
        Thank you for your replies. My understanding is that I can deduct:
        stamp duty,
        solicitor’s cost,
        conveyancing (for purchase as well as the sale),
        surveys,
        and estate agent fees. Is there anything else? ☺️

        Comment


          #5
          Any capital expenditure on the property.
          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
            Originally posted by jpkeates View Post
            Any capital expenditure on the property.
            This is stuff which you did which improved the property i.e. not repairs/refreshment. For example if the bathroom was old and needed re-doing that is NOT a capital expense. If there was not an on-suite bathroom at all, and you created one, then it is (as long as you didn't already use as an expense against rental income). The thing that you did has to be in the property at the time of sale. For example fitting a new boiler (where there was never a boiler before) is not a capital expense if you later replace the boiler with an electric heating system.

            Legal expenditure might also be capital (lease extension, purchase of a freehold, legal expenses to assert/maintain your right to the property somehow for example if you needed to sue a co-owner in order to force a sale.

            Things that you did to the property specifically to facilitate the sale (e.g. buyer says you need to get some asbestos removed, or fit certain fixtures, or apply for some sort of insurance indemnity)

            Comment


              #7
              If I may add one further question to my initial post: apparently you’re supposed to add the capital gains to your earned income to decide which tax band you fall into. But you may not know exactly how much you will earn in the year that the property is sold. So am I supposed to use the previous year’s income to decide between 18% or 28% CGT rate? I assume HMRC will retrospectively put things right after the current year tax return has been submitted.

              Comment


                #8
                This is an interesting point and I am in the same position for the first time.

                As far as I can tell, you first submit your return and then HMRC do the calculation and you pay what they tell you.
                And then you have to report the same event on your next tax return when any adjustments would be made.

                But this is my first time as well, so live and learn!
                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
                  Yes you also do not know what other later capital gains or losses you might have in that tax year. There may be other ways of doing it but the best (since you are likely doing tax returns anyway) is that it is all sorted out on the tax return.

                  I did one last tax year and the HMRC 30 day wizard form was in fact reasonably good. I can't say it was a pleasurable experience though.

                  Comment


                    #10
                    Originally posted by zoreh View Post
                    Thank you for your replies. My understanding is that I can deduct:
                    stamp duty,
                    solicitor’s cost,
                    conveyancing (for purchase as well as the sale),
                    surveys,
                    and estate agent fees. Is there anything else? ☺️
                    Council tax for vacant period.

                    Comment


                      #11
                      Sorry to jump in here. Any formulas to calculate PRR. I too have to pay CGT this year.
                      thanks

                      Comment

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