Capital Gains Tax

TopSec

I hope somebody on here will be able to advise me. I have a property I rent out that I am thinking of selling but don't really want to get stung for 40% tax.

I understand that if I pay the council tax on it for 6 months it will revert back to being my place of residence (even though I wouldn't be living there) and I would therefore get around the tax hit - or is that too simple?

Any tax advisors out there?

[Deleted User]

Does that not smack at tax avoidince?

I think SVT, wickett or welsh alex may have the info you need.

TopSec

It certainly does smack of tax avoidance

No doubt I will undoubtedly get stuck for paying more of it after today anyway!

[Deleted User]

A quick google found the following, which may be helpful:

http://www.fool.co.uk/taxes/articles/cgt_property.htm

[Deleted User]

TS - yup, that's too simple. You have to actually live there. Remember that the first £8,800 of gains is exempt. And if it's jointly owned, double that exemption!

I'm presuming you've worked out your likely gain, after deducting the fees relating to buying and selling. And taper relief. Have you ever lived in the property?

[Deleted User]

SOG - good summary.

[Deleted User]

Avoidance is one thing, but evasion is the one that lands you in jail.

[Deleted User]

SO mr Tax god can you explain the diffrence to me in simple terms?

TopSec

SVT, Yes I lived in it for 4 years (87-91). I own it myself and mortgage is paid off so we are talking about a reasonable chunk of money.

Thanks SOG, I'll have a look.

[Deleted User]

TT - one is using legal loopholes before HMRC spot them and get new legislation passed. The other is breaking the law.

TS - oooh, pre-'98. Indexation allowance as well. And you are only charged on the proportion of the gain that relates to when you weren't living in it. And another three years as well for good measure. But SOG's link explains that better than I could.

[Deleted User]

Disclaimer - I'm a chartered accountant, not a chartered tax advisor. I got half way through the studies for it before deciding I didn't want to to work in tax after all (too much admin, the way my department worked at the time). Haven't done any tax work (other than my dad's return) for a couple of years.

[Deleted User]

So is that the form of accountnat excitment? getting some avoidence in?
Make you a legend in your profession

[Deleted User]

'cept you have to report yourself for doing it these days. So they can spot the loopholes more easily.

[Deleted User]

So tax accountants get no fun whats so ever? I can imagine the school talk now...

"So kids, who has thought of tax accountancy as an exciting job?"
"Imagine the risk of all the sharp pencils!"

[Deleted User]

TT, excitement counts as taxable benefit which is taxed at the highest rate for which the employee is liable. It is, of course, partially offset against ennui (under Schedule 618892B), but only within the same tax year -- that particular loophole was closed some time ago. This explains, of course, why you may see accountants getting excited towards the end of the tax year if they have built up a substantial boredom allowance during earlier months.

I hope this explanation is clear.

[Deleted User]

I just point my clients towards;

Furniss (Inspector of Taxes) v Dawson [1984] STC 153

...and hope they go away. But I deal with different sorts of clients.

Think SOG and SVT have got it all wrapped up there.

Taper relief.....<<shudder>>

[Deleted User]

LOL SOG

Coming up to april I can sense the accountants of the world building up in excitment.

TopSec

Jeez, it's all a bit complicated isn't it!

[Deleted User]

Ah good, the expert has arrived. And promptly started spouting case law.

Anyway, I'm off for lunch quickly - the tax guy I'm walking to town with needs to get back before the budget speech...

[Deleted User]

Oh cool! The budget!!

I'm going to boil my head in acid, or something similarly exciting...