Let Property Campaign - Disclosure

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    Let Property Campaign - Disclosure

    I am currently disclosing income from property for the last 10 years. I am self employed. I jointly owned property with my wife, who has died of cancer 2 months ago. We were seperated for the last 10 years - all the time we owned this joint property. All the income from it went to me to pay for mortgage from my account only, and profit (however small), went to me. My self employed income has been small and not even passed the personal allowance, so I have not had to pay tax because of low income for 10 years . . . . maybe only 1 or 2 years of it. The declared income would cause me to pay, including fines, around £5000 on my initial calculations if I allocated all the income to myself. My wife worked for a few years, but most of the 10 years was on benefits for job seekers, then sickness, then DLR at the end (due to cancer illness for years) and had housng allowance for where she lived in rented accommodation. She had no money in her estate on death. House was joint and passed to me by intestacy. My question is, as I am declaring all the income to make it all above board and straight with HMRC, if I allocated 50% each of the income, I would therefore pay no tax, or very little, as my business income was so small. My wife's 50% income from property would not make her reach her personal allowance. The big qiestion is: if income is 50/50 as its supposed to be, would the HMRC / Work and pensions start to investigate why she was on benefits for that time and look for some recompense on those years and can they make a claim against her half of the house, which is now passed to me as 'Joint Tenants'? Even though she never received any of the income or profit on a sale. Or .. . would it be better to say I received 100% income and then pay the tax myself - even though it should be 50/50 according to HMRC. If I go the 50/50 route as it should be, then I would pay no tax. I don't want to open a can of worms and make things difficult with this declaration. Thanks

    #2
    You might have to explain to HMRC why all of the income went to your account, particularly if the mortgage was in your sole name.

    With a potential £5k tax bill, I would have a chat with a local accountant who will charge a few hundred quid and do the job properly.

    HMRC penalties are based on their view of your openness and co operation, so you don't want to be caught out being clever when you're meant to be resolving the issue once and for all.
    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).

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    • Reply to Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
      I've put some figures in my reply to a post just now but answers below to your questions.

      a] £80k Jan 2021 sale price.
      b] As property purchased before...
      08-12-2021, 00:55 AM
    • Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

      1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
      06-12-2021, 13:51 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

      Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
      Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
      08-12-2021, 00:41 AM
    • Reply to Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      JP Keates
      I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

      Here's the timeline:

      March 1982 - 1992 3 Owners,...
      07-12-2021, 18:01 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
      07-12-2021, 17:28 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by jpkeates
      Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
      If it was simply to improve what was then your home, it fails the basic test.

      Get yourself to...
      07-12-2021, 16:22 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by AndrewDod
      The probate resets a lot of the stuff, but my main response was unapproved
      07-12-2021, 15:36 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by AndrewDod
      You are really short on detail:

      Date (year & month) bought in joint names ______ (what % was yours then)
      Date it converted to your sole name ______ (presumable date of death of parent 2?)
      Declared vale at probate _________
      Capital expenses between date of probate 2...
      07-12-2021, 15:33 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by reluctantlandlord1976
      We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
      07-12-2021, 14:53 PM
    • Reply to Caught out by changes to Capital Gains Tax
      by AndrewDod
      Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
      07-12-2021, 14:33 PM
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