Capital Gains Tax Calculation

[romeogolf]

My salary puts me at the top end of the 20% bracket, but depending on an end of year [December] bonus I sometimes drop over into the higher rate..

When selling a second home, with the CGT due within 30 days now, how is it decided whether the 18% or 28% rate applies? Do I just pay the 18% and then an additional payment at the end of the year if I'm over the threshold?

I'm sure there's no loophole to sell the property before December, pay the 18% and laugh all the way to the bank with my Christmas bonus but....!

Edit to clarify: I appreciate the 28% only applies on the bit above the higher rate, I just meant to ask what's due at the time of sale. Thanks!

Edited by romeogolf on Wednesday 15th July 15:50

[rsbmw]

The calculation will be based on the tax year, so if you sell in November or January it won't make a difference, though may alter timings / if you're receiving a rebate or paying a tax bill. If the bonus puts you only just over the tipping point though, consider putting the excess into Pension instead to maintain your bracket. I'm not certain on CGT for selling a second home, but most tax calculations care mainly about adjusted net salary (i.e. after pension).

Edited to add, speaking to someone more competent than I may be helpful.

[romeogolf]

rsbmw said:

The calculation will be based on the tax year, so if you sell in November or January it won't make a difference, though may alter timings / if you're receiving a rebate or paying a tax bill. If the bonus puts you only just over the tipping point though, consider putting the excess into Pension instead to maintain your bracket. I'm not certain on CGT for selling a second home, but most tax calculations care mainly about adjusted net salary (i.e. after pension).

Edited to add, speaking to someone more competent than I may be helpful.

Thanks - It's more of a "how does it a work?" than a "can I minimise my bill?" query so no real need to pay for professional advice at this point.

The payment is due within 30 days of the sale, which is before the end of the tax year - so is that figure based on the year to date or a forecast of the year-end figure? Do I get asked for an estimate of my income for the calculation?

[rsbmw]

I honestly don't know how the calculation is performed at the point of making it, but you should be able to balance it through self assessment and get any overpayment back / pay any excess.

[hutchst]

You do it twice. Once with the 30day CGT return and then again with the year end return where it might be adjusted either way.

[Eric Mc]

Yep, the new system means you have to submit the Capital Gains Tax calculation twice - firstly within 30 days of exchange of contracts and then again some time after the end of the tax year in which the gain occurred. The first submission will be definitely wrong and the second one, hopefully, will correct the inaccuracies in the first submission.

Don't forget that the new rules makes you pay the (wrong) capital gains amount within 30 days of exchange of contracts as well.

Read this thread from a few days ago -

https://www.pistonheads.com/gassing/topic.asp?h=0&...

[romeogolf]

Eric Mc said:

Yep, the new system means you have to submit the Capital Gains Tax calculation twice - firstly within 30 days of exchange of contracts and then again some time after the end of the tax year in which the gain occurred. The first submission will be definitely wrong and the second one, hopefully, will correct the inaccuracies in the first submission.

Don't forget that the new rules makes you pay the (wrong) capital gains amount within 30 days of exchange of contracts as well.

Read this thread from a few days ago -

https://www.pistonheads.com/gassing/topic.asp?h=0&...

Thanks, I think that answers my query. The bit in bold is exactly why I asked the question, nothing forgotten.