RossP wrote:My understanding: When we sell, (assuming £60k value appreciation) we each have to pay capital gains tax at 40% on our half (£30k) but we can deduct our capital gains allowance (£10k) and then any additional exemptions. Currently that's the last 18 months and some percentage for the fact we used to live there. I don't fully understand how to calculate those deductions but lets assume they total another £10k each. That means we actually pay 40% tax on £10k = £4k tax bill each.
The applicable CGT rate is no longer 40%.
For residential property gains the rate is normally 18% or 28% or both and
The basic rate of CGT for residential property disposals is 18%. The 28% rate of CGT applies to individuals who are higher rate income tax payers, or whose gains exceed the unused part of their basic rate tax band. Further information can be found here: https://www.gov.uk/capital-gains-tax/ratesBoth those extracts taken from
https://assets.publishing.service.gov.u ... cument.pdf (which may be out of date by now but covers other changes that were due to be made on another Consultation).
The CGT Annual Exempt amount for 2019-20 for individuals is now £12,000.
My question: Apart from wondering if my understand above is correct, my question is whether the proposed changes would only affect the amount I can deduct, over and above my annual allowance and any relief i am due for any time I have actually lived in the property? So this wouldn't affect anyone still living in their property at the time of sale, but might affect situations of inheritance or divorce where the house is not lived in by the owners for more than 9 months, rather than the previous 18 month allowance.
Have I missed anything? 9 months seems generous enough in order to put a house on the market and sell it, no?
I think the proposals should not change the basic CGT computation which arrives at your rough gross gain of £60,000 (that before incidental costs of disposal) .
What is set to change, subject to the Consultation and enactment, is the final period exemption you've seen and lettings relief (there's an existing technical issue in that the two should not overlap/be double counted).
I haven't looked deep enough into the proposed changes to lettings relief nor how they would be applied but see chapter 4 includes
The reform to lettings relief announced at Budget 2018 will limit the availability of lettings relief and restrict it to those who share occupation of their house with a tenant for all disposals made on or after 6 April 2020 which suggests in your case there'd be no Lettings Relief at all on a post 5 April 2020 disposal.
Clearly if you manage to exchange an unconditional contract (other than say vacant possession to be obtained in February 2020) prior to 6 April 2020 any changes shouldn't impact upon you. Presumably there's nothing to stop you marketing later this year.
Currently and very roughly, as it presently stands you'll have owned the flat for about 6 (?) years and you should get as a minimum Main Residence Exemption on about 40% of that (this ignoring the final period exemption for ease) which would be £24,000.
Using the wording in the link above but amending:
That part of the gain attributable to the letting and not qualifying for PRR is £36,000.
... lettings relief is due on the lesser of:
The amount of PRR (£24,000), or
£40,000, or
The gain attributable to the letting (£36,000),
the amount of lettings relief due is £24,000The £60,000 gross gain is therefore reduced by 2 x £24,000 = Chargeable £12,000 - which should be easily covered by the two Annual Exemptions as applicable.
That's all very rough and ready and perhaps you should study this in greater detail (noting it is for 2018-19):
https://www.gov.uk/government/publicati ... elief-2019PinkDalek are you against these changes?
I'll pass on that, if you don't mind, as I try and keep to Practical Issues but I imagine the Consultation I originally linked to goes into further background.
E&OE