CGT on second property

[Catz]

I’m hoping to sell a second property this year and am trying to make sure I have everything I need to know about in place.

I’ve owned it for about 25 years and it was my main residence for 6 years so I believe I can get some Private Residence Relief.

I know that I’ll have to report and pay CGT within a month of selling. It appears this has to be done online and this is where I feel a bit stuck! I obviously want to get everything correct but also ensure I’m not paying more than I need to.
Do I need an accountant standing behind me while I complete the online form? Or is it relatively straight forward? Has anyone any experience of the online form recently?

Thanks for any help.

[Eric Mc]

Catz said:

I’m hoping to sell a second property this year and am trying to make sure I have everything I need to know about in place.

I’ve owned it for about 25 years and it was my main residence for 6 years so I believe I can get some Private Residence Relief.

I know that I’ll have to report and pay CGT within a month of selling. It appears this has to be done online and this is where I feel a bit stuck! I obviously want to get everything correct but also ensure I’m not paying more than I need to.
Do I need an accountant standing behind me while I complete the online form? Or is it relatively straight forward? Has anyone any experience of the online form recently?

Thanks for any help.

HMRC will tell you that you don't need an accountant - and they know everything

You can't do anything without setting up your online filing authority. This is a unique, once only, set up and has no bearing on any other authorities or logins you may already have with HMRC for other matters, such as Self Assessment or a Personal Tax Account.

Here's their link for setting up your CGT filing.

https://www.tax.service.gov.uk/capital-gains-tax-u...



Note - if the property is jointly owned, then ALL parties involved need to set up their opwn individual filing for their share of the gain.


One thing that you need to know is that an accurate CGT calculation is impossible without knowing the total of all your other income from all sources for the tax year in which the gain was made. If you have a gain on (say) 31 May 2021, you will need to notify HMRC of the gain and pay the CGT by 30 June 2021. The problem is that you won't know what your overall other income up to 5 April 2022 will be, so your CGT as calculated in June 2021 will not be correct.

HMRC doesn't care because they will also ask you to submit everything all over again after 5 April 2022 and will refund you if you have overpaid the CGT or collect the extra if you have underpaid. Interest will be charged.

[sbk1972]

Search on my userid as I asked a similar question a few months ago. Some tremendous help from many of the users on here and was a god sent. Lots of info in there.

My advice is to create a spreadsheet. You will need to have all the figures relating to costs when the house was first brought, and when sold, as these can all be deducted. If you have improved the house, extensions, additional rooms, then these costs can be deduced. Costs relating to maintaining the property cant be included

However in truth the main reduction in CGT is the time you lived / rented. Convert these in to months. Add 9 months relief on to the lived / deduct 9 from rented. Work out the percentage of time these are in relation to the whole time owned. These percentages then are used on the over all gain.

You can then deduct your £12.5K CGT relief, then need to work out if you will be under / over the 40% tax for that year.

When you submit these figures to HMRC they ask you these details and then display how much they calculate you owe. You have 30 days post sale to pay.

Creating a spreadsheet makes life far easier, especially when it comes to working out things / adding costs etc.

Its a horrible sickening feeling paying CGT. :-)

[Catz]

Eric Mc said:

HMRC will tell you that you don't need an accountant - and they know everything

You can't do anything without setting up your online filing authority. This is a unique, once only, set up and has no bearing on any other authorities or logins you may already have with HMRC for other matters, such as Self Assessment or a Personal Tax Account.

Here's their link for setting up your CGT filing.

https://www.tax.service.gov.uk/capital-gains-tax-u...



Note - if the property is jointly owned, then ALL parties involved need to set up their opwn individual filing for their share of the gain.


One thing that you need to know is that an accurate CGT calculation is impossible without knowing the total of all your other income from all sources for the tax year in which the gain was made. If you have a gain on (say) 31 May 2021, you will need to notify HMRC of the gain and pay the CGT by 30 June 2021. The problem is that you won't know what your overall other income up to 5 April 2022 will be, so your CGT as calculated in June 2021 will not be correct.

HMRC doesn't care because they will also ask you to submit everything all over again after 5 April 2022 and will refund you if you have overpaid the CGT or collect the extra if you have underpaid. Interest will be charged.

Thanks for that. I accidentally set up my online filing the other day even though the property isn’t on the market yet! I hoped I might get a preview of the online form but sadly not.

That’s not very fair about interest being charged when you’re trying to follow the guidelines! I’m taking some “time out” from work this year so it’s possibly I won’t even be a tax payer. Maybe this will help come April 2022.

[Catz]

sbk1972 said:

Search on my userid as I asked a similar question a few months ago. Some tremendous help from many of the users on here and was a god sent. Lots of info in there.

My advice is to create a spreadsheet. You will need to have all the figures relating to costs when the house was first brought, and when sold, as these can all be deducted. If you have improved the house, extensions, additional rooms, then these costs can be deduced. Costs relating to maintaining the property cant be included

However in truth the main reduction in CGT is the time you lived / rented. Convert these in to months. Add 9 months relief on to the lived / deduct 9 from rented. Work out the percentage of time these are in relation to the whole time owned. These percentages then are used on the over all gain.

You can then deduct your £12.5K CGT relief, then need to work out if you will be under / over the 40% tax for that year.

When you submit these figures to HMRC they ask you these details and then display how much they calculate you owe. You have 30 days post sale to pay.

Creating a spreadsheet makes life far easier, especially when it comes to working out things / adding costs etc.

Its a horrible sickening feeling paying CGT. :-)

Thankyou. I’ll have a look on my userid too.

I have found a rough CGT calculator which was useful to get an idea of costs.
If I get the price I’m looking for on the property then it looks like 20k will be winging it’s way to HMRC. I guess it could be worse! Fingers crossed at the budget.

[Eric Mc]

Don't forget that the end of the tax year is 5 April. If you sell the property on or before 5 April 2021, it will be taxable in the year 2020/21.

If sold AFTER 5 April 2021, it will be taxable in the year 2021/22.

[ziontrain]

Eric Mc said:

Don't forget that the end of the tax year is 5 April. If you sell the property on or before 5 April 2021, it will be taxable in the year 2020/21.

If sold AFTER 5 April 2021, it will be taxable in the year 2021/22.

And also don't forget that it's the date of exchange that's relevant here rather than the date the sale completes - although the 30 day timer for reporting kicks in from the date of completion (just to keep things simple).

[Catz]

ziontrain said:

Eric Mc said:

Don't forget that the end of the tax year is 5 April. If you sell the property on or before 5 April 2021, it will be taxable in the year 2020/21.

If sold AFTER 5 April 2021, it will be taxable in the year 2021/22.

And also don't forget that it's the date of exchange that's relevant here rather than the date the sale completes - although the 30 day timer for reporting kicks in from the date of completion (just to keep things simple).

Thank you both.
It’s unlikely to sell before April. Mainly because I’m not organised yet!