CGT Advice

any reputable accountancy firm would advise you, i would choose one that has been trading for a long period

It would be more tax-efficient to give some of the properties to your wife before the divorce comes through, instead of selling them and giving her the money. That way no CGT liability attaches to the properties transferred. It then becomes her problem, and if she sells them, the CGT bill will be hers. But depending on what the circumstances are, she may wish to keep them on and not sell them yet.

If you or she do wish to sell one or more, it's better for you to give her half of each before you divorce, and before you (jointly) sell. That way whatever the CGT bill will turn out to be, you will each be responsible for half of it (which is fairer) but more to the point, this way you will *each* be able to benefit from the annual exempt amount.

Assuming that none of the properties has ever been your home, the CGT liability will as follows. The gain is equal to the net sale proceeds (i.e. what your buyer pays you, minus the selling expenses, i.e. legal and/or estate agency fees) minus the gross acquisition cost (what you paid when you bought it, including expenses, i.e. legal and survey fees and stamp duty).

The rules are about to change. If you complete the sale (sign the contract) before 6th April, you will be able to deduct from the above gain:

(1) Indexation allowance, which sort of compensates for inflation between

1982 and 1998. This is worth between about 1% and about 105% of the gross acquisition cost, depending on when you bought it. The earlier the more. There is a table at . Deduct this from the gain to arrive at the indexed gain.

(2) Taper relief, which replaced indexation allowance in 1998. For each whole ownership year beginning after 5th April 1998, you may deduct 5% from the gain (up to a maximum of 40% for 8 years), except that the 1st two years don't count, but that you get a bonus year if you owner the property before March 1998. The maximum is always 40%, it's just a question if you reach this maximum after 9 or 10 years of ownership. What's left after deducting taper relief from indexed gain is called tapered gain.

(3) From tapered gain, deduct your annual allowance (provided you haven't already used it up during the tax year in which you sell). This is £9200 this year.

The rest is then added to your income and taxed at 10%/20%/40% depending on whether it falls into the starting/basinc/higher bands.

If you sell after 5th April, (1) and (2) above do not apply. All you get is (3), but it'll be a bit more than £9200. The rest is then taxed at 18% irrespective of your other income.