Capital Gains Tax

[Weirdfish]

With all this talk about reforming the CGT rules I was wondering how people minimize their risk of getting hit by a rather large tax bill.
Property for example, I know there's a few on here who have a btl portfolio, what plans, if any, have you put in place to allow for CGT, or is it one of those that you just have to put up with when selling.
Obviously don't put anything on an open forum that shouldn't be on an open forum.

[plw]

I'm not planning to sell any of mine, CGT is payable on any gains anyway. If there's an increase as floated by the Treasury, unless there's a good reason to sell now, I can't see any way of mitigating it. Transferring into a limited company also attracts CGT and SDLT, so not worth doing for most people. To sell now to take advantage of the SDLT holiday incentive, any BTL would need to be vacant and tenants have extended rights atm. Conversely, some investors are buying BTL properties to reduce their SDLT liabilities (the 3% premium still applies).

[ryanb741]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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[Stringer]

For shares, you can transfer a certain amount into a S&S ISA, within which gains can be crystallised tax free. Or, you can gift some shares to your spouse, who can avail of their own separate CGT allowance to realise gains without penalty. Plus staggered sale across separate Tax years.

The suggested increase in CGT would be unattractive to traditional Tory voters who presumably voted to avoid that sort of thing from Labour, so I’d be surprised if they bring it in, or at least that heavy-handed.

Whilst I realise the pandemic measures have to be paid for, and threatened investment gains is a bit of a ‘First World Problem’ to have, it’s worth noting that in most cases the investment base will have been taxed once already (income tax, national insurance etc.), so an increased tax penalty a second time around is a bit of a blow. Especially given there will have been varying degrees of risk undertaken to achieve that investment gain in the first place.

[Rodder]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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People would never move. We wouldn’t have a flexible work force and consumer confidence would implode.

The amount of perceived confidence and security home ownership offers keeps consumerism going. It would crash the economy worse than Covid. Imagine if all the middle class suddenly lost 40% of there main asset!

[David_D]

With all this talk about reforming the CGT rules I was wondering how people minimize their risk of getting hit by a rather large tax bill.
Property for example, I know there's a few on here who have a btl portfolio, what plans, if any, have you put in place to allow for CGT, or is it one of those that you just have to put up with when selling.
Obviously don't put anything on an open forum that shouldn't be on an open forum.

As others have said, not much planning can be done (apart from inter spouse transfer and not selling more than one property in a tax year).

I don't "like" paying tax but if I make a gain and it's taxed then I can't complain. For a start, you get a separate tax free allowance. There's an argument for lumping income and gains together and taking them as one.

[mr noble]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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Won’t ever happen.

There will always be so much opposition, from everyone that owns a home, and most of the the MPs themselves, that it’d never get through a vote in parliament, let alone the Lords.

[mr noble]

On a similar topic.....Has anyone sold a property recently and had to do the 30 day CGT payment online?

I decided to sell one or more of my BTLs and complete on the first sale this Friday having exchanged Friday just gone.

Sold it after 20 years of ownership and about 17 years of it being let to the same tenant.

Sold for a good 10% more than I thought it’d get, due to the SDLT holiday.

The CGT bill is going to be significant and I’m nervous about doing it myself online, but my accountants hourly rate is rather eye watering so I’m planning on having a go.

Where my BTLs are (Cambridge) I think the whole thing is dead. To many anti-landlord new rules and more coming in. My agent said he’s not sold a house to an investor in Cambridge in the last 12 months.

This last year has taught me that life can be short and having fun now is more important than being the wealthiest guy in the care home, so I decided to sell a couple of BTLs, pay off the mortgages on the remaining ones and on our own home, and spend the rest on fast cars and the kids. (And a new vacuum cleaner for the wife.)

[gbn13]

People would never move. We wouldn’t have a flexible work force and consumer confidence would implode.

The amount of perceived confidence and security home ownership offers keeps consumerism going. It would crash the economy worse than Covid. Imagine if all the middle class suddenly lost 40% of there main asset!

Agreed.

I doubt that taxing of a main residence is even being seriously considered.

[Roberto]

On a similar topic.....Has anyone sold a property recently and had to do the 30 day CGT payment online?

I decided to sell one or more of my BTLs and complete on the first sale this Friday having exchanged Friday just gone.

Sold it after 20 years of ownership and about 17 years of it being let to the same tenant.

Sold for a good 10% more than I thought it’d get, due to the SDLT holiday.

The CGT bill is going to be significant and I’m nervous about doing it myself online, but my accountants hourly rate is rather eye watering so I’m planning on having a go.

Where my BTLs are (Cambridge) I think the whole thing is dead. To many anti-landlord new rules and more coming in. My agent said he’s not sold a house to an investor in Cambridge in the last 12 months.

This last year has taught me that life can be short and having fun now is more important than being the wealthiest guy in the care home, so I decided to sell a couple of BTLs, pay off the mortgages on the remaining ones and on our own home, and spend the rest on fast cars and the kids. (And a new vacuum cleaner for the wife.)

You made 10% more than you expected and you're worried about your accountant's hourly rate?

Funny old world indeed.

[Skier]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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I don't believe for one minute that this will happen. The economy requires a vibrant housing market and people need to be able to move to support an ever-changing economy. I can see things like ISAs being impacted, VAT, income tax etc. As with all national debt it will be kicked into the long grass for future generations and the effects of inflation to make the repayments a reduced burden.

[mr noble]

You made 10% more than you expected and you're worried about your accountant's hourly rate?

Funny old world indeed.

No point spending £1500 on paying someone else to fill in an online form that I can do myself, surely?

Was just saying that it’s a daunting task.

So much hate on here these days.

[Peck]

No point spending £1500 on paying someone else to fill in an online form that I can do myself, surely?

Was just saying that it’s a daunting task.

So much hate on here these days.

You need a new accountant!

[mr noble]

You need a new accountant!

Lolz. You’re right! I am actively looking for one. He gave me a quote of £600+vat to do the 2-3 hours work for me and same for my wife who owns half the house (since last month)

Painful. Hence asking whether it’s as straight forward as it seems to do it yourself.

To be fair, he was more reasonably priced when doing the regular stuff for my companies. This is not his bag.

[Hood]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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Not a chance of that happening with any government.

[Roberto]

No point spending £1500 on paying someone else to fill in an online form that I can do myself, surely?

Was just saying that it’s a daunting task.

So much hate on here these days.

Hate? Good grief. You're a delicate little flower aren't you!

And yes, at that price you need a new accountant. But I'll take a stab in the dark you'd still be way up on the deal.

[Devonian]

No point spending £1500 on paying someone else to fill in an online form that I can do myself, surely?

Was just saying that it’s a daunting task.

So much hate on here these days.

Our Accountant did one for us when it first came in so he hadn’t done one before. Didn’t charge very much. I’d be honest with him and tell him to lower his prices or you’re off. That does seem very excessive.

[mr noble]

Hate? Good grief. You're a delicate little flower aren't you!

And yes, at that price you need a new accountant. But I'll take a stab in the dark you'd still be way up on the deal.

Very much tongue in cheek, mate.


Having had a look back over the accountants quote just now, it was to include a full tax return for my wife who’s never had to do one before, and the same for me. So maybe not as expensive as it first seemed.


However, I just had a read through the “CGT on sale of Property” pages on the government website, and it does all seem pretty simple. Just inputting all the figures that I’d have to produce for my accountant anyway, so I’m going to have a go at doing it myself.

[JasonM]

On a similar topic.....Has anyone sold a property recently and had to do the 30 day CGT payment online?

I decided to sell one or more of my BTLs and complete on the first sale this Friday having exchanged Friday just gone.

Sold it after 20 years of ownership and about 17 years of it being let to the same tenant.

Sold for a good 10% more than I thought it’d get, due to the SDLT holiday.

The CGT bill is going to be significant and I’m nervous about doing it myself online, but my accountants hourly rate is rather eye watering so I’m planning on having a go.

Where my BTLs are (Cambridge) I think the whole thing is dead. To many anti-landlord new rules and more coming in. My agent said he’s not sold a house to an investor in Cambridge in the last 12 months.

This last year has taught me that life can be short and having fun now is more important than being the wealthiest guy in the care home, so I decided to sell a couple of BTLs, pay off the mortgages on the remaining ones and on our own home, and spend the rest on fast cars and the kids. (And a new vacuum cleaner for the wife.)

Thats great Greg, I think you've done the right thing, ( I can recommend the Vax Airlift range, much better than the Dyson Animal it replaced although the dirt receptacle is smaller )

[Bravo73]

Imagine if all the middle class suddenly lost 40% of there main asset!

Are you aware of how CGT actually works?

It’s a tax on the capital gain (ie the increase in value). In order to pay £400,000 CGT on a £1m property (ie 40%), that property would have had to increase in value by £1.43m!

[Weirdfish]

Bringing this thread back from the depths, not sure what's going to happen in the budget but, when calculating the CGT do you add the gains made to your income for that year to see whether you pay the higher rate of tax.
In other words, if you're in the lower tax bracket, but with the gains made from selling your btl it pushes you into the higher band, do you pay 40%
Also, if you were to release some equity on your btl, ( mortgage free property ), or remortgage, how does this affect the CGT, if at all.

[stoneyloon]

Does this calculator help you?

https://taxscouts.com/calculator/capital-gains-tax/


Cheers,

Adam.

[Kingstepper]

I'm fairly confident what is going to happen is all property will be subject to CGT, even a primary/only property. This is supposed to come in over the next couple of years. In return though property will be exempt from inheritance tax

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Isn't most property below threshold for inheritance tax anyway? Another tax for the less well off.

[Weirdfish]

Does this calculator help you?

https://taxscouts.com/calculator/capital-gains-tax/


Cheers,

Adam.

No! It just makes things worse, lol.
Blimey, you try and invest in something that will give you decent return only to have it snatched away.
I’ll just buy cars and watches in future.

[deepreddave]

Try here https://www.gov.uk/capital-gains-tax/rates
Highest rate is 28% on residential property on any capital gains that take you into the HR band.

There's no deduction when calculating the CG for mortgages, only acquisition cost plus enhancement expenditure, so remortgaging doesn't impact the CG.

[David_D]

Isn't most property below threshold for inheritance tax anyway? Another tax for the less well off.

Basic threshold is only £325,000 - that's less than the average price for the South East now, apparently!

https://www.gov.uk/government/news/u...r-2020#history

Even up north where I am you will struggle to find a "decent" property (say, 3+ bedrooms) in "decent" area for less than £325,000.

[Kingstepper]

Basic threshold is only £325,000 - that's less than the average price for the South East now, apparently!

https://www.gov.uk/government/news/u...r-2020#history

Even up north where I am you will struggle to find a "decent" property (say, 3+ bedrooms) in "decent" area for less than £325,000.

South East and especially London is rather anomalous but anyway threshold increases to £500,00 if left to (grand)children.

[wuyangkid]

On a slightly unrelated note. Say I am selling a property and I have no other income for the year, am I able to utilise both the personal allowance and also the capital gains allowance on profits from the sale? I've looked online and the guides only mention the you can reduce CGT by using the capital gains allowance but in my mind, I should be able to apply the personal allowance too if it is unused

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[Mr Pointy]

On a slightly unrelated note. Say I am selling a property and I have no other income for the year, am I able to utilise both the personal allowance and also the capital gains allowance on profits from the sale? I've looked online and the guides only mention the you can reduce CGT by using the capital gains allowance but in my mind, I should be able to apply the personal allowance too if it is unused.

No.

[Taxboy]

No.

Agree The CG allowance is only allowed against Capital Gains. Your personal allowance can only be utilised against income

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[Weirdfish]

Another one for you, we purchased a property a few years back, consisting of 2 retails units and one flat above each retail unit, this was purchased as one lot.
If we decided to sell off in smaller lots, maybe one flat one year, the second flat the year after, then the retail units the year after that, how is the CGT worked out?

[Taxboy]

Does this help https://www.gov.uk/government/public...gains-tax-2020

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[David_D]

On a slightly unrelated note. Say I am selling a property and I have no other income for the year, am I able to utilise both the personal allowance and also the capital gains allowance on profits from the sale? I've looked online and the guides only mention the you can reduce CGT by using the capital gains allowance but in my mind, I should be able to apply the personal allowance too if it is unused

I never make capital gains and I'd love to be able to offset the CGT tax-free allowance against my income every year!

[David_D]

Another one for you, we purchased a property a few years back, consisting of 2 retails units and one flat above each retail unit, this was purchased as one lot.
If we decided to sell off in smaller lots, maybe one flat one year, the second flat the year after, then the retail units the year after that, how is the CGT worked out?

Looks like 3 separate sales in 3 separate years but obviously you'd have multiple legal and other costs (and costs of splitting the (presumably single) property title in the first place).

[Taxboy]

Looks like 3 separate sales in 3 separate years but obviously you'd have multiple legal and other costs (and costs of splitting the (presumably single) property title in the first place).

Plus presumably you'll be granting a lease on the flats. I'd recommend a good accountant / tax adviser with experience in this area

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[wuyangkid]

I never make capital gains and I'd love to be able to offset the CGT tax-free allowance against my income every year!

Never thought about it this way round, I guess it makes more sense that you can't apply personal allowance to capital gains thinking about it this way

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[jimyu]

Another one for you, we purchased a property a few years back, consisting of 2 retails units and one flat above each retail unit, this was purchased as one lot.
If we decided to sell off in smaller lots, maybe one flat one year, the second flat the year after, then the retail units the year after that, how is the CGT worked out?

A series of part disposals, have a google of ‘a/a+b calculation’

The tax rate on the commercial property gains will be 20% and resi 28% (and payable in 30 days of sale). Assuming HR tax payer