Chancellor prepares to announce that capital gains tax will be charged on British property sold

[Alan Collett]

http://www.pomsinoz.com/forum/money-finance/199693-uk-charge-expats-cgt-sale-uk-property.html#post1936373583

 

Initial comments.

 

Suggest we all wait for the detail. I'll have a blog on the subject on the GM Tax website once I've seen reliable information (link to our FB or Twitter pages if you're interested: https://www.facebook.com/pages/GM-Tax/212185302138679 and @GoMatildaTax)

 

Best regards.

[Fisher1]

If the hypothetical house is owned by a couple, and it is in both their names, they will have a CGT allowance of £10,600 each. That is £21,200 before any CTG is paid (http://www.hmrc.gov.uk/cgt/intro/basics.htm)

 

I believe CTG is currently calculated as follows:- The gain (i.e. the difference between the purchase price plus expenses) is first charged at 18% rising to 28% if it total income rises above a certain level. Remember if the house is in both names, then any gain is halved. So a £50,000 gain becomes £25,000 each, minus £10.600 allowance = a taxable amount of £14, 400 each. That would be a bill of between £3 and £5 thousand pounds each, depending on other income.

 

A second point to take into account is this - if you have lived in the house AT ANY TIME for six months or longer (i.e. it used to be your family home) then there is a reduction of the taxable gain which I believe is three years of the average increase. So if you have owned a house for ten years and made a gain of £50,000 then the average annual gain would be £5000 which would see the overall gain reduced by £15,000 leaving a taxable gain of £35,000.

 

All this information is explained fairly clearly on the UK gov website.

[Alan Collett]

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm#4

 

Note also ...

 

Best regards.

[fensaddler]

I was potentially liable for CGT when I sold my first flat, because I had been renting it out for several years after we moved out and bought a house. Given my experience, my advice to everyone would be to find yourself an accountant who understands CGT, because having found such an accountant, I ended up, legitimately, paying no CGT. Had I tired to submit my return on my own, it is likely I would have copped a bill for several thousand quid. Convinced me that accountants are lovable after all!

[ozziepom]

it's not anyone else's problem if they could not sell their house!

 

I couldn't agree more with that part, but the rest...nah - sorry.

 

Mr & Mrs Smith probably didn't make any profit at all, in fact they likely made a loss (in real terms), the Joneses probably also made a (real terms) loss, albeit a smaller one.

 

Really, its up to everyone to educate themselves on the real knock-on effects of inflation, and of nominal vs. real profit or loss.

 

Another quick example:

 

Mr White buys a painting for $100 in 1970, in 2013 he sadly passes on, and leaves it to his grandson. Grandson White goes on the Antiques Roadshow and is delighted to hear its now worth $300.

 

Q. Did grandson White make a profit on his granddad's investment?

 

A. In Nominal terms Yes, but in real terms No.

 

Google "nominal vs real", I'll update later as to the reasons why if need be but all I'm saying is tax is one way the govt generates income, inflation is another. Most people recognise tax is the govt taking a cut of the fruits of their labour, very few realise inflation is a far more deadly one.